Aussie Firebug

Financial Independence Retire Early

OCT 2018 Net Worth $559,359 (+$99,551)

OCT 2018 Net Worth $559,359 (+$99,551)

Oh baby!

BIG bump this month after we sold Investment Property 1.

The huge influx of cash actually hid a terrible month for every other asset we hold.

The reason it was such a big jump this month is because CBA valued my property at $416K which was almost $100K less than what I sold it for!!!

And I can completely understand why they would do that. Some people think the banks overvalue properties, but my personal experience has been the complete opposite. I don’t think it’s in the bank’s interest to overvalue if I’m being honest. The property is their security for the loan after all. If something happens and you can’t pay back the loan, they are hoping that the sale of the property will pay them out. This is why a deposit is important for banks. It mitigates risk.

If I were to put my tin foil hat on for a second and cook up a spicey conspiracy. I believe the banks have specifically not updated any of my properties to their true value or even a conservative value to curb further exposure to property. A very specific algorithm that takes into account what similar surrounding properties are selling for has been paused across the board.

BartTinFoilHat

Just look at everything that’s been happening within the last 18 months. I/O loans are so much more expensive than P&I. I’m actually in the process of switching my loans over to P&I not because I have reached the end of my I/O period, but because the rate is so much better for P&I and it only works out to be around $100 extra each month but with the added benefit of paying less interest plus cutting into the principal (which I will get back when I sell).

The banks are making it exponentially harder for anyone to get loans (both investors and homeowners).

I don’t think that this is necessarily a bad thing. Something needed to be done in Melbourne and Sydney as the prices were getting out of control.

But still…Undervaluing by $100K? Really?

 

Net Worth Update

We got smashed in everything but cash this month. Our spending was way more than usual, ETFs and Super were way down and we started to put money onto our travel card for our overseas trip next year.

We are sorta dollar cost averaging into the travel card lol. Instead of doing a big transfer before we leave, we are doing it gradually over the next few months to spread the risk of the AUD dropping.

Our cash holdings are currently $218K 😱

I would often see people with large cash holdings and scoff since that money should obviously be invested straight away…But I’m telling ya. When you’re actually in the hot seat, it’s different.

I know that the research says that a lump sum works out better the majority of the time vs DCA… buuuuuut I just can’t do it. Our money is sitting in our offset and we are going to drip feed $15K in each month over the next 18 months unless there was an opportunity too good to pass up on.

It’s kinda cool to know we could pay off all our debt if we sold our shares too. Very comforting 😊

Properties

IP1 has officially been sold! Wooohoo 🎉

Should I remove IP1 from further updates? It might confuse future readers

‘Hey, why do you have IP2 and IP3? Where’s IP1?’

I might just leave the following

 

Property 1 was sold in August 2018

 

*DISCLAIMER*
Various data sources (RP data, Domain.com etc.) are used in combination of what similar surrounding properties were sold for to calculate an estimate. This is an official Commonwealth bank estimate and one which they use to approve loans.

ETFs/LICs

Oct18NW

Our shares had a terrible month 😭

But I’m secretly happy. We are cashed up right now. If this global recession everyone keeps talking about could just drop already, that would fantastic.

We bought $15K worth of Milton during the dip last month 😬. The plan is to drip feed our cash into the market over the next 18 months at around $15k a pop.

 

Networth

 

SEP 2018 Net Worth $459,807 (-$5,904)

SEP 2018 Net Worth $459,807 (-$5,904)

A new player has joined the game!

WelcomeMilton

Our very first LIC (Listed Investment Company) made its way into the fold in September after we officially transition our portfolio to Strategy 3. This is the dividend focussed portfolio that will mainly consist of Aussie shares through a mix of BetaShares A200 ETF plus AFI and Milton LICs.

That doesn’t mean I’m going to sell the international part of our portfolio (VTS & VEU). Oh no no no. It simply means that we are focussing on the above combo for the foreseeable future.

Although less diversified, and slightly less tax efficient than Strategy 2, Strategy 3 offers something that no other strategy to date has offered.

Strategy 3 does not rely on selling down to fund retirement. 

The thing is… when you are relying on selling any part of your portfolio in retirement to survive, you are at the mercy of the market. I pondered strategy 2 over many nights…weeks…months… I have full faith in an indexing strategy and believe that international diversification is important. But I kept coming back to the day we pull the pin and stop working. What happens if the market tanks right after we retire or when we are close to?

It could mean working for years and waiting for the market to recover.

GFC2.0 Nope

The thing about dividends and the reason that strategy 3 ultimately won me over was the fundamentals of a business is less affected in a crash than the share price.

After reading Motivated Money by Peter Thornhill, intrinsic value became crystal clear and I really made the connection between a business and its share price is largely tied to their ability to produce a growing income. There are of course exceptions to this rule, many companies have insane valuations based on potential alone. I like potential and ceilings when we’re talking about NBA rookies, but when it comes to investing, give me the proven vet who can consistently give me 15,5,3 any day of the week.

There were many businesses back in 2008 that were not affected greatly by the GFC in terms of the bottom line. But the ass fell out of the share price because human emotion got involved. Sure the dividends may have dipped, but nowhere near the same level (in terms of percentages) as the share price. This is because the dividends are tied back to fundamentals and how much income the company is able to produce, not based on how many inexperienced and ill-informed investors are rushing for the exits after reading a doom and gloom article in the Herald Sun.

I feel a lot more confident that Strategy 3 will hold up through thick and thin vs Strategy 2 even though Strategy 3 could delay our fire date. This is because even in a recession, good income producing companies will still do just that, produce an income. And seeing those dividends hit the account each quarter will help immensely.

Confidence is the name of the game and something I have come to appreciate more and more as I have been reading and listening to overseas FIRE bloggers and what they went through in 2008. It’s hard for most of us Aussie millennials to truly understand what a recession can do to your psyche and confidence. A lot of people talk a big game online and how they didn’t understand why people weren’t buying everything in 2008 when the market bottomed out and it’s easy not to sell if you don’t have to during a crash.

Let’s see how mentally strong everyone is when we actually go through a big crash. When everything you’re reading is doom and gloom (shoutout /r/ausfinance), every finance interview is diving into why this is the end of capitalism as we know it, and why now is the time to learn basic survival skills in preparation for the upcoming Armageddon.

It’s super easy to do all the right things when you have nothing to lose. Shit’s a lot different when you have hundreds of thousands of dollars on the line.

Strategy 3 will help us mentally during the next bust which, depending on who you listen to, is either right around the corner or many years away…

Net Worth Update

Really expensive month for us. We booked a trip overseas 🎉🎉🎉 and basically paid for most of the travel and accommodation in September.

The markets weren’t good with our ETFs and LICs down overall. We did receive dividends though 🤑 but it hasn’t hit our account yet (Div Ex date only) so next month will benefit from that bump.

ETFs/LICs have officially overtaken real estate equity and has become the biggest slice in our net worth pie 😊

Properties

 

No changes in the properties this month.

 

 

*DISCLAIMER*
Various data sources (RP data, Domain.com etc.) are used in combination of what similar surrounding properties were sold for to calculate an estimate. This is an official Commonwealth bank estimate and one which they use to approve loans.

ETFs/LICs

sep18NW

Welcome aborad MILTON! Not off to the best start but I have faith in your ability to produce some juicy franked dividends for us over the next couple of decades 😘.

Bad month for the Aussie market. Internationals keep chugging along though. When will the US market decline??? It’s the bull that never ends 📈 (it will end at some point)

 

Networth

 

AUG 2018 Net Worth $465,711 (+$10,871)

AUG 2018 Net Worth $465,711 (+$10,871)

Three big things to cover for August.

First off, we have a brand new edition to the portfolio!

A200

I have essentially replaced our VAS ETF with the BetahShares A200. The only major difference between the two products in terms of what they are invested in is the A200 is the top 200 (in terms of market cap) companies listed on the ASX whereas VAS is the top 300. So VAS is more diversified which is a good thing, but the reason we made the move was because of management fees.

I’ve said it time and time again, management fees are not only extremely important. But they are something I as an investor can control how much I pay to an extent. So when BetaShares offers the A200 @ 0.07% which is half the costs of VAS (0.14%)…they have my attention.

I waited a little bit in hopes that Vanguard would respond by lowering their product, because I don’t want to add another holding to my portfolio unless I really have to, but after a few months I hadn’t seen any sign of them looking to lower it, so I pulled the trigger on the A200.

I not only benefit from investing in this ETF, I also want to reward BetaShares with my business after they have produced the lowest Australian index ETF in history! Moves like this create competition amongst the providers and are good for us as investors moving forward. We might think that our current ETFs and LICs have pretty low management fees. But in reality, the US market offers much more options with lower fees.

US_VanguardMER

You might not think there’s much difference in paying 0.14% compared to 0.04% but it does add up over time with a decent sized portfolio.

 

The second announcement is the new segment I have created called ‘Ask Firebug Fridays‘. It’s a collection of Q&A’s from readers who have submitted their questions via the contact page. It’s something I should have created ages ago. I was spending so many hours responding to readers questions and was often answering the same questions over and over again, which reminds me that I need to create a FAQs about FIRE one day.

There would be days where I would sit down to pump out an article but never even got started because I spent an entire day responding to emails/comments/tweets. At least with #AFF, I can create more content for you guys to read/listen to every Friday to inspire you with FIRE related content 😊.

 

And last but not least, I have been sponsored by two awesome companies! SelfWealth and Relentless Hosting are now helping out with the costs of running this blog and I couldn’t be any happier that this little passion project I started over 3 years ago is starting to pull it’s own weight and earning me some money. Now if we were to judge this as an investment it would be…ah… how would I put it… horrendous.

At a very rough guess, I’d say I would have put in over 1,000 hours into this website with $0 financial gain and honestly, I never started this site with the goal to monetize it. I wanted an Australian FIRE community that I could discuss strategies and techniques with. And back in 2015, there were 0 Aussie FIRE sites that I could find, so I decided to make my own and it’s been one of the best decision I’ve made to date.

It’s not like I didn’t have paying offers for advertising either. But I didn’t want to affiliate myself with those companies and would have definitely felt like I ‘sold out’ if I accepted advertising money from credit card companies. I will only ever affiliate myself with companies/services I either use myself or believe in 100%.

I’m not sure how the sponsorships will go, but if I can continue to push a decent amount of traffic, it could be the start of a great partnership.

 

Net Worth Update

The markets were jumping in August! Over $4K for both the ETFs and Super.

I was holding a little bit too much cash and finally pulled the trigger on A200 with a $10K trade. Down a little on cash due to an expensive month (new car tyres 😤).

Closing in on the half a Mil…Will we get there by the end of the year…🤔? I’m gunning for it 😈

Properties

 

No changes in the properties this month.

 

 

*DISCLAIMER*
Various data sources (RP data, Domain.com etc.) are used in combination of what similar surrounding properties were sold for to calculate an estimate. This is an official Commonwealth bank estimate and one which they use to approve loans.

ETFs

aug18shares

Brooooooo. VTS continues to DOMINATE.

It has had a total annualized return of 26.16% (or $14K of gains) since I first bought it in 2016 and has been my best performer by a mile. I almost want to sell it to lock in those gainz because surely it can’t go much higher. And if you look at the incredible bull run of the US…surely it’s gotta come down at a certain point. But timing the market is a suckers game so I will sit for now. If Australia tanks and the US didn’t, it would be tempting to sell VTS and clean up cheap Oz shares. But we’ll see.

 

Networth

 

JUL 2018 Net Worth $454,841 (+$27,258)

JUL 2018 Net Worth $454,841 (+$27,258)

Big month for the net worth in July.

We had a few things add up which explains the big jump which I’ll cover in the Net Worth Update below but it was a great month.

 

I went on a business trip to a major city in July which required me to catch the train each morning.

What an experience it was. Don’t get me wrong, catching the train is a bit of a novelty for a country kid like myself, and I did feel a bit more ‘Big City Slicker’  dressing up in my nice suit each day. But maaaaaaan I could tell that the daily commute on the train could get old really quick.

I’m not ganna say it was this bad

Commute

But it was pretty cramped.

And everyone seems to be in a rush. I honestly felt like most people around me were in the rat race.

Another thing that struck me was the apparent wealth that most of these people had. I had dinner with a few other professionals from the city one of the nights and the whole conversation was just one big dick measuring contest. No one knew each other but we were all in the same industry and I had a very good idea of the income for all of them and let me tell you right now, it’s not that much higher than mine.

So you could understand my amazement as the conversation drifted from work to other topics such as:

  • One dude bragging about his $600 dress shoes only to be one-upped by another noob who was happy to part ways with $1,000. I looked at them and trust me, they look like every other bloody black dress shoe I’ve ever seen.
  • How BMW’s are an essential item and how one guy could ‘never go back to a merc’. Righto cobba.
  • Somehow paying more for a house is seen as a badge of honor. It’s amazing how impressed some of these guys were with a postcode.

And there was other stuff like fancy watches and custom-made suits but you get the point. I’m not saying that they weren’t wealthy, for all I know they are loaded. But this trend of ‘flashy’ shit was everywhere! No way everyone is rich.

These dudes nearly fell over when I told them that were I live you could get a kick ass new 4 bedroom house for around $400K. And it was hilarious when they found out I was renting. I could feel the entire table’s attitude towards me shift when that was bought up. I swear some of them must have thought I was some loser who couldn’t afford a house.

These guys definitely don’t read the blog 😂

Net Worth Update

Two big things happened which mostly attributed to the big bump this month.

  1. HELP debt
  2. Tax Returns

Mrs. FB HELP debt was reduced from her payments through the year which equated to $5K.

The other one was that both of our tax returns came through which came to around $5K mainly due to the property deductions.

Other than that, we managed to save around $10K cash after a great month and two extra pays (both of us got an extra payday due to the way the payday fell). We had a $3K Super bump and the ETFs chipped in $2.7K.

Properties

 

No changes in the properties this month.

 

 

*DISCLAIMER*
Various data sources (RP data, Domain.com etc.) are used in combination of what similar surrounding properties were sold for to calculate an estimate. This is an official Commonwealth bank estimate and one which they use to approve loans.

ETFs

ETF returns for July

JulyNW

 

VAS coming in with the good on the franked dividends and the rest making up for it in cap gains. Nice little bump for July.

 

 

Networth

 

JUN 2018 Net Worth $427,582 (+$4,078)

JUN 2018 Net Worth $427,582 (+$4,078)

And so ends another financial year.

Which leads us to the most exciting part…

TaxRefund

It always amazes me when I hear people say they haven’t done their tax return yet month after July or even worse when they haven’t done one for years!

You’re leaving money on the table. And it’s so easy to complete a return these days that you really shouldn’t have an excuse for not getting it done once you have your group certificate. I’m seeing my accountant tomorrow actually (my return is a little complicated this year) but I’m doing Mrs. FB’s return through the ATO website MyGov since hers is very straightforward.

One of the cool things about posting monthly snapshots of our net worth is that it creates an online historic journal not only for you guys out there reading these posts but also for myself to look back on in years to come. Looking back on June last year it is amazing to see that we have grown our net worth by $81K over the last 12 months.

Like always, I plan to do a savings review in the next few days to see how much we spent over the financial year and compare that to last year. We only really have two years worth of real data because we only joined finances in 2016. It will be interesting to see if we have spent more or less than the previous year and how our returns have gone.

 

 

Net Worth Update

Bit of an ‘eh’ sorta month. Little Super bump in Super and ETFs. Saved pretty well and we received some dividends.

Not a huge gain, but a gain nonetheless. As long as we’re moving up, it’s still a win 😊

Properties

 

No changes in the properties this month again (over a year since a change)!

I have been doing some research in what properties are selling for that are similar to mine in the area and the current valuations I have from CBA seem way outdated (conservative). But to avoid too much speculation, I will keep the prices as they are being reported by CBA. It’s always better to be conservative

 

 

*DISCLAIMER*
Various data sources (RP data, Domain.com etc.) are used in combination of what similar surrounding properties were sold for to calculate an estimate. This is an official Commonwealth bank estimate and one which they use to approve loans.

ETFs

ETF performance update for June

June18NW

Nice little bump from last month. Loving the dividends from the international ETFs 💪. I have the juicy franked Australian dividends coming in July which is something to look forward to.

Every time I get dividends makes me want to move to a more Australian focused portfolio and further away from a predominately capital gains international one. One on this in an upcoming post.

 

 

Networth

 

MAY 2018 Net Worth $423,504 (+$8,494)

MAY 2018 Net Worth $423,504 (+$8,494)

A solid month of savings with a little help from the assets sees the net worth soar to new heights in May.

Averagish (not a word I know) month expense wise with us spending a touch over $4K.

The hidden costs of certain activities added up last month. A pet peeve of mine are trips to Melbourne for events, weddings or to see family and friends. Not that I don’t want to see family or friends or go to events in Melbourne. It’s all the added costs/hassles associated with it that sucks. It takes around 1.5 hours from where I live to get to Melbourne, the trip usually means a fast food lunch stop at the servo past Pakenham which, while relatively inexpensive, leaves me feeling like shit and still more expensive than if I had made lunch myself, city link tollway adds another $17.50, you then have to pay for parking in the city which can be another $25 and then there are the accommodation costs which are around $120 p/n depending on how cheap we are going.

So a typical weekend in Melbourne can end up costing us:

Fuel round trip: $35
Toll: $17.50
Parking: $25
Accommodation: $120
Wasted time in traffic: 3 Hours

Total: $197.50

I’m not including food or anything related to the event because we would still have to eat if it was local and pay for the event. I’m just adding the ‘Melbourne’ element.

$197.50 doesn’t sound like much. But invested at 9% over 50 years works out to be $14,723 bucks… Bit of a hyperbole but you get the point.

 

City living to me just seems so incredibly expensive.

Everything you do seems to cost money.

Parking:
City: Please drive around for 30 minutes before I give you the opportunity to pay $20 to park here
Country: You see all the spare parking spots in the main drag. Take your pick friend. Btw, what’s meter parking?

Clubs:
City: Hello gents. It’s going to cost ya $20 bucks just for the privilege of breathing the air in here. Also, the drinks are special tonight, $20 red bull and vodka’s
Country: Yeah, no shoes are alright mate. Just watch the broken glass down back and don’t feed the dog. That will be $3 bucks for a pot.
*Disclaimer: Well aware that city clubs offer a lot more but still 

Driving:
City: Oh, you want to use the fastest route to your destination? Here is this great tunnel that you helped pay for (taxpayers money)…… But we’re ganna have to keep charging you more money to use it each time. And if you want to take the long way around, I hope you downloaded some Podcasts because surprise surprise, road works have just started 🙂🔫
Country: Follow this road for 20km straight and you’ll reach the town. Just watch for the potholes and roos.

Housing:
City: And this lovely two bedroom shack will only cost 1.2M, your first born and the tip of a black rhinoceros horn.
Country: $350k plus a slab of VB and you’ve got yourself a deal cobba!

 

 

Net Worth Update

Hitting new territory in terms of net worth this month as autumn comes to an end. All round contribution from savings, little bump from ETFs and Super to cap off a solid month.

Properties

 

No changes in the properties this month.

 

 

*DISCLAIMER*
Various data sources (RP data, Domain.com etc.) are used in combination of what similar surrounding properties were sold for to calculate an estimate. This is an official Commonwealth bank estimate and one which they use to approve loans.

ETFs

ETF performance update for May

NetWorthMAY

Nothing to write home about but any gains are always a plus.

Networth

 

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