Aussie Firebug

Financial Independence Retire Early

APR22 Net Worth $1,030,743 (-$9,748)

APR22 Net Worth $1,030,743 (-$9,748)

I publish these net worth updates to keep us accountable, have others critique our strategy and show that reaching financial independence in Australia is very doable without winning the lotto, having a high paying job or inheriting a wad of cash. The formula to be able to retire early is simple, the hard part is being consistent and sticking to a plan for many years. The table at the bottom details our entire journey from being $36K in debt all the way until we reach πŸ”₯


It’s been a while since I logged into AFB/recorded any podcasts.

The whole ASIC fiasco got me down a little honestly. It feels like the whole community that has helped so many people are being vilified because of a few bad apples.

I also felt the need to lay low and watch what others were doing in the FIRE/personal finance space. I’ll be dropping a podcast very soon that will cover my thoughts on ASIC’s new interpretations and how that’s going to affect AFB content moving forward.

In other news.

My freelance business is really starting to take off. I’m getting more business than I want (first world problem) and I’m starting to create a data product that I’m really excited about. This influx of work has been the other reason I’ve taken my foot off the AFB creator pedal last month.

It’s usually a juggling act between AFB content, my business and travelling. Some months I’ll record 5 podcasts and write 3 articles and other months I’ll be lucky to produce 2 pieces of content.

Freelancing has been a blast but I’m slowly getting pulled back into the ‘normal’ everyday office politics and BS. There are always going to be boring/pointless parts of the job regardless of what you’re doing but I’m trying to minimise that stuff as much as possible.

I find the greatest joy in building something that creates value with colleagues who are just as passionate. I’ve spoken about it before but I really like the idea of having a small team that can help me build data products/services and foster a kick-ass work environment! I fell in love with the culture when I worked at a few different startups in London during our overseas trip. Trying to replicate that is high on my goals list for the next decade ahead.

Net Worth Update

Not a whole lot to report with the old NW. It was a down month for shares and Super which saw us slide backwards around $10K.

 

We’re continuing to build up our cash reserve for a new car in the not so distance future. I’m still having a really hard time choosing between a traditional ICE vehicle or a new EV. The longer we wait, the more attractive EVs become. But can we wait another 2-4 years? Probably not πŸ˜…

*Expenses include everything we spend money on to maintain our lifestyle. We do not include paying down our PPoR loan as an expense, only the interest
*Investment income is simply 4% of our FIRE portfolio divided by 12


 

Our expenses were up a lot in April. The reason for the big jump was us pre-paying for a trip to Bali. We fly out in late June for 8 days of holidaying 🏝🍻

Shares

The above graph is created by Sharesight

No purchases in April but I’m publishing this article in mid-May and I just can’t resist the current sale atm so we’ll most likely be putting through a buy order soon.

 

Networth

APR22 Net Worth $1,030,743 (-$9,748)

MAR22 Net Worth $1,040,491 (+$31,701)

I publish these net worth updates to keep us accountable, have others critique our strategy and show that reaching financial independence in Australia is very doable without winning the lotto, having a high paying job or inheriting a wad of cash. The formula to be able to retire early is simple, the hard part is being consistent and sticking to a plan for many years. The table at the bottom details our entire journey from being $36K in debt all the way until we reach πŸ”₯


A very quiet March for us this year.

We had one of our best friends tie the knot and I’d almost forgotten how much fun big weddings are πŸ₯³ . The wedding was originally scheduled for 2020 which was when we were overseas, so one of the small benefits (for us 😜) of Covid was that the date was pushed back due to the restrictions. We were incredibly lucky to pull off our destination wedding last year but so many of our friends had to delay/push theirs back. I’ve heard that some of the more popular venues have a backlog of more than 2 years 😱. It’s pretty incredible how Covid has affected so many different industries in different ways.

Another thing that’s been on my mind this year is buying a new car. I know I’ve spoken about it but I’m in a real dilemma of choosing a cheap reliable petrol car that will get the job done or waiting a tad longer to splash out a bit on a new EV (electric vehicle).

This decision is partly financial and partly wanting to join the EV revolution that I think is just beginning.

I’m just guessing here but I reckon fossil fuel cars will be dead by 2030. Petrolhead enthusiasts might still be buying them but just look at the trend of renewable technologies. Solar, wind, thermal, storage etc. are all getting better and cheaper and it’s only a matter of time before it makes sense financially to make the switch. It’s already happened with solar panels and with the amount of new EVs being produced each year, batteries will surely be joining the party soon.

There’s a premium to pay at the moment but I just love the self-sufficient concept of electrifying as many things in your life as possible and harnessing the energy of the sun.

Some car manufacturers are also talking about a Bi-directional charging capability for new EVs. So in theory you could charge your EV at home during the day from your solar panels and use some of the battery at night to power your house. Your car could double as a home battery when you’re not using it. I think this could have enormous potential for old degraded batteries that aren’t suitable for cars anymore. Imagine if you could recycle old degraded car batteries into a home storage solution! But I’m no electrical engineer and there might be technical reasons why this is hard to do/impossible so we’ll just have to wait and see.

Regardless, the potential of EVs is exciting to think about and maybe there will be some kick-ass rebates in the not so distant future.

I’d love to know if you’re stuck in the same predicament and what your thought process is in the comments below πŸ™‚

 

 

Net Worth Update

The share market bounced back which was the main contributor to our gains this month.

But the big news from March was our purchase of Bitcoin.

You can read about our decision in this detailed article here, but in a nutshell, we bought Bitcoin for three reasons:

  1. I’m personally interested in this technology and get joy from seeing how it works and participating
  2. Speculative play. The value proposition of Bitcoin is favourable IMO
  3. It’s a vote for a more democratic financial system

There was some talk about the energy consumption concerns of Bitcoin that I didn’t address in my article. And that’s a fair point which is ironic considering how pro-renewables I am.

I posted the below on Facebook which basically sums up how I feel about it:

Bitcoin uses a lot of energy, no getting around that. But what about the energy the current system uses?

Here is a study that suggests that the banking industry uses twice as much.

We still need to address how crypto is powered but most people gloss over the inefficiencies of the current system it could one day replace.

Maybe the energy concerns will be the downfall of Bitcoin, who knows?

But when was the last time a new technology that offers a better solution to a current system was not adopted because it used a lot of energy? And if the report is accurate, it actually uses less than half of the energy it takes for the current system to run anyway! I understand that you can’t really compare the current financial system to Bitcoin just yet but surely you have to acknowledge that the modern-day banking industry uses a shit load of energy to keep the lights on.

Bitcoin (or another cryptocurrency) could offer a superior solution in the future for less overall energy and I think it’s important that the naysayers keep an open mind with regard to this point.

Also, for the pro-Bitcoin/crypto people out there in the FIRE community. For the love of God, can we stop being so bloody aggressive in the comment section when people have valid concerns about this new technology?

It pains me to see how cult-like some of the responses have been. Especially when someone is clearly just trying to learn a bit more.

Dismissing questions and concerns with “WRONG” or “You just don’t get it, HFSP lol” doesn’t help anyone. In fact, if you can’t explain the reason why you bought Bitcoin or another crypto, odds are you’re only buying it in hopes that you can sell it for a profit later.

One of the FIRE community’s greatest strengths is explaining financial concepts in an easy to digest manner.

 

$12K of Bitcoin has joined the fold.

*Expenses include everything we spend money on to maintain our lifestyle. We do not include paying down our PPoR loan as an expense, only the interest
*Investment income is simply 4% of our FIRE portfolio divided by 12

Another high month for the blue line.

Shares

The above graph is created by Sharesight

No new shares in March.

 

Networth

We Bought Bitcoin

We Bought Bitcoin


In the middle of 2017, a colleague of mine asked the entire IT team if they wanted to buy some Bitcoin. He was pretty into it and had been explaining to us how it all worked. The conversation went something like this:

“Hey guys, my friend is buying some Bitcoin and if you want him to purchase some for you then now is a good time. I can set you guys up with your wallets and everything and then we can transfer some Crypto to each other and I’ll show you the transaction on the blockchain. You guys in?”

Now you might think I’m a sporty outgoing personality type (which is true) but at my core, I’m a massive nerd πŸ€“. And although I had been reading about Bitcoin for a few years I was still very much intrigued by the blockchain technology that powered it and I wanted to see for myself what all the hype was about.

So nearly everyone in the IT team bought $100 worth of Bitcoin in September 2017 when the going price was $4,763 AUD. I was rather unimpressed that there was a $5.50 transaction fee (5.5% of the investment!) just to buy the bloody thing so I only ended up with ~$94 bucks worth which at the time was 2% of a Bitcoin.

This was just a bit of fun to see how it all worked. We bought enough to muck around, but not enough to move the needle… or so I thought.

The 2017 Boom and Bust

The next few months were crazy!

We would come into the office each week and the first point of call was talking about the price of Bitcoin. It was skyrocketing!

Our $94 turned into $150 in a mere matter of weeks. And then $250, and then $450. We all had a laugh that this was our ticket to early retirement (they didn’t know about my blog πŸ™ˆ) and we were only a few weeks away from buying a Ferrari.

Bitcoin peaked on the 16th of December 2017 at $25,506 AUD and our initial investment of $94 dollars had turned into $510 in less than three months.

Now I understand that it wasn’t a lot of money because our initial investment was so low but the return on investment was out of this world. Everything is hard to quantify if you don’t have a point of reference. I understood that even though we only made ~$400 bucks, the rate of return over that short period of time with zero effort was likely never to be repeated again in my lifetime.

And then came the crash…

Source: Yahoo Finance

Our tiny slither of Bitcoin which was valued at $510 in December 2017 plummeted back down to earth and bottomed out at $96 dollars a year later in December 2018.

This was my first taste of the Bitcoin rollercoaster everyone talks about.

 

Post Crash and General Feelings

A few of the guys in the team had actually sold their Bitcoin at around $450-$500 which was pretty much the peak in 2017 so they were very happy.

But I never had any intention of selling mine.

First and foremost, I was curious about the tech. However, I had a lot of reservations about the practicality of Bitcoin as a currency and if I’m being honest, I didn’t really think it was going to take off. I kept racking my brains on what problem Bitcoin was actually solving for me as an Australian. I understood the utility of this Cryptocurrency for other countries where the government was freezing accounts. And there was definitely a utility for criminals to send and receive value anonymously. But I could do everything I wanted to do with Australian dollars almost just as quickly as Bitcoin and with fewer fees.

I just couldn’t see this thing taking off.

I didn’t really understand what Bitcoin was back then. What it could be and what it represented.

But I had this hunch that it might be worth holding onto moving forward and the worst-case scenario meant that I’d lose my initial $100 bucks… not a big deal.

If I’m being honest, I was actually hoping Bitcoin and the other cryptocurrencies would eventually disappear. I was receiving a fair few emails from readers asking me about it and I originally just thought it was a Ponzi scheme. No intrinsic value, hardly any utility for Australians, high transactional fees etc. It also seemed complex and I couldn’t be bothered learning about something that I thought was going to be a relic of the past within a few years. I never included my tiny amount of Bitcoin in my net worth updates because I didn’t want any more emails.

But crash after crash Bitcoin continued to rise from the ashes to reach new heights.

This new ‘thing’ just wouldn’t stay dead…

Down The Rabbit Hole

The biggest turning point for me to do a deeper dive into the world of Bitcoin was when it surged again in late 2020. I was personally getting a lot of requests to do a Crypto podcast as well as a bunch of threads popping up in the FIRE Facebook group.

It was around this time that I read Why I’ve Changed My Mind on Bitcoin by Nick from the ‘Of Dollars and Data’ blog. I really value Nick’s commentary and that article really cemented the idea that there might be more to this Bitcoin thing than meets the eye. If Nick was writing about it, it was worth another look.

I decided to commit to educating myself on Bitcoin so when I eventually booked an expert on the podcast, I didn’t sound like too much of a n00b.

A quick side story….

I actually was in communication with Alex Saunders from Nugget news about coming on the podcast. He was one of the most recommended Australian authorities within the Crypto space and had built up a huge following online. Everything looked legit so I sent him a few emails. I nearly fell off my chair a few weeks later when my mate sent me an article that said Alex was being taken to court for potentially millions of dollars owing to his community 🀯.

Holy cow. This Crypto space was like the wild west.

Another name that kept coming up was an Australian who was living in the US, Vijay Boyapati. Vijay wrote the very popular book ‘The Bullish Case for Bitcoin’ and was very good at articulating his ideas during interviews. I reached out to him and he agreed to come on the podcast last year.

His book really changed what I thought I knew about money.

The mistake I made when I first came across Bitcoin was that I didn’t know the history of money. You need to really understand how money came about in the first place to give you the context of why the invention of Bitcoin was a game-changer. Explaining this could be an entire blog post on its own (or maybe a few posts honestly) but if you’re interested, Vijay’s book is a great starting point.

The history of money is more of a psychological deep dive into how humans interact and trade with each other. It’s super fascinating stuff and it challenged some core beliefs I had previously.

I started watching Michael Saylor’s videos on YouTube and I really enjoyed the ‘Decoding Bitcoin’ series from the Australian podcast The Passive Income Project.

The more I read, the more I realised how little I understood about money. I know a decent amount about how to become financially independent, but the mechanics of where money came from, how it’s created and why it works is an entire discipline.

Risk vs Reward

For me personally, the risk-reward proposition for a small amount of Bitcoin is quite attractive.

And it’s for this reason that we have now allocated 1% of the portfolio to this new asset class (we currently have around $12K of Bitcoin). And I’m seriously thinking about upping that to 2% in the future but let’s start with 1%.

This is the way I look at it – the worst-case scenario is that Bitcoin becomes worthless and we lose 100% of our investment. It’s only 1% of our portfolio so while I don’t like wasting money, it’s not going to ruin us financially. The upside for this investment however is unlimited.

I don’t know what’s going to happen in the future but I’m fairly confident that Cryptocurrencies are going to play some sort of role in our financial lives moving forward. I don’t know if Bitcoin will be the dominant player in 15 years but it’s the horse I’m backing for now.

I was very close to spreading that 1% across the other top 10 Crypto (by market cap) but I’m just not as educated on them and lacked conviction.

I think Bitcoin has a major ‘first mover’ advantage with its network but its crowning jewel is the decentralised nature of the protocol. I’ve read that other Cryptocurrencies are not decentralised and there are actually a few people at the top running the show. From my understanding, the whole point of using blockchain technology is to be decentralised. If you want to create an app, community, new system or whatever and it’s not going to be decentralised, you’re much better off using traditional technology with a normal database. That would be a lot more efficient as the processing power required to run the blockchain can be quite high.

I’m not an expert though so please if I’ve got this part wrong, let me know about it in the comments. Why would you use blockchain tech if whatever it was you were building didn’t need to be decentralised?

End Goal

I’ve used the word ‘investing’ a few times in this article but I’m hesitant to call anything to do with Bitcoin an ‘investment’.

I’m not even sure I know what to call it.

It’s not really investing but I think it has graduated past gambling at this point. There’s definitely a heavy amount of speculation but every investment in history has had some degree of speculation by definition.

It’s now possible to generate an income from your Cryptocurrencies but this isn’t something I have experience with so I can’t comment on the practicality and risks associated with staking.

The way I see it, we have two potential scenarios that can play out:

  1. Bitcoin succeeds and is adopted worldwide
  2. Bitcoin fails and becomes worthless

The goal is scenario 1.

We don’t have any intention of converting our Bitcoin back to fiat currency. This technology either works or it doesn’t. And if it does work, we should be able to use our Bitcoin for future purchases.

It’s more of a store of wealth than anything. Of course, I want the value of Bitcoin to go to the moon now that we own some. But the main strategy behind this purchase is for us to be able to actually pay for future expenses using this Bitcoin.

Think of it like money that buys more the longer you hold it. An interesting concept given the current rate of inflation.

This is different from our shares portfolio which is being built to generate passive income for us.

But Why?

If I’m already living a great semi-retired life and am on track to reach full financial independence within the next few years – why bother with Bitcoin at all?

That’s a great question!

There are a few reasons

  1. I’m interested in the technology and personally get satisfaction from participating
  2. I’ve concluded that the upside of Bitcoin succeeding far outweighs the downside of it failing given a small allocation within our portfolio
  3. It’s a vote for a better system

Points 1 and 2 are pretty self-explanatory but I want to expand on point 3.

When I was trying to think of the utility of Bitcoin back in 2017 I didn’t really understand how inflation worked and how it is used by the government.

I’m not an expert so I’m not going to try and pretend to know all the complexities of our current financial system but it doesn’t take a rocket scientist to know that inflation is rising in Australia. Your dollars are buying less each year even factoring in wage growth.

One of the main problems with the way our democracy works is that politicians are incentivised to be shortsighted. They are constantly slapping on band-aids rather than actually fixing the problem.

An obvious example of this is how much money has been created over the last few years. But this quick sugar hit doesn’t come for free. Someone always has to pay the bill. And all this printing has started to come back to bite us in the ass.

Source: https://tradingeconomics.com/

Inflation is a hidden tax.

People hardly even know it’s happening.

But make no mistake about it, high inflation without wage growth means you’re losing purchasing power. Your hard-earned dollars are becoming less useful and the rate at which they depreciate is out of your control.

I don’t like the fact that short-sighted politicians are happy to fire up the money printer at the expense of fiscally responsible savers that have built up a safety net. Is it too hard for them to maybe tighten their belts a bit in bad times? Why does it seem like every solution these days is to start making it rain at the first sign of the economy slowing?

I’m not saying I have all the answers, I’m just pointing out that the relentless drive for continuous growth is punishing responsible savers through the debasement of our currency and rewarding speculators loading up on cheap debt.

The more money that is created, the less purchasing power we all have.

Bitcoin flips this narrative.

The amount of Bitcoin that can be created is set in stone. It can’t be changed.

Part of me wants this experiment with Cryptocurrencies to succeed because I think it presents a superior financial system that can’t be screwed with by corruption and greed. Both of which are unfortunately innate traits of human beings.

Converting my fiat currency to Bitcoin is a vote for a better system.

Conclusion

We’re officially in the Crypto game (technically have been since 2017 😜).

I’ve really enjoyed learning about Bitcoin over the past few years but it was the history of money that really caught my attention. I find it absolutely fascinating how humans created and used money in past generations and I think the history of money is a prerequisite to fully understanding the utility of this new technology.

Over the last two years, the risk/reward proposition has shifted for me personally and I now consider a small amount of Bitcoin in a portfolio to be perfectly appropriate for any Australian looking to reach financial independence.

You’ll be fine without it of course but I think we’ve reached the point where most people can rationalise someone having a small amount. This is a lot different from years gone by when a lot of well-regarded reasonable voices would have publically shamed anyone who even thought about ‘investing’ in Cryptocurrencies. I must admit that I was secretly judging people who were buying it back in the day too πŸ™ˆ.

We live and learn and I can admit when I was wrong.

I’d love to know what you guys think about Bitcoin in the comments.

Are you starting to believe? Or is it still a huge Ponzi scheme?

As always,

Spark that πŸ”₯

Ask Firebug Fridays 37 feat. Terry W

Ask Firebug Fridays 37 feat. Terry W

Nothing written below is financial advice. The questions and answers below are for general information only and should not be taken as constituting professional advice. You should always do your own research when making any financial decisions.

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Question (03:39)


Hi,
My partner and I have two joint ventures with another married couple.

BUSINESS ONE:

This is our primary business. Our family trust owns 50% of the company’s shares and the other couple’s trust owns the other half.

The business has been growing well ever since we purchased it in 2019. To purchase this business, the company itself took out a substantial loan – using its own assets as security. This is a loan that the business owes.

Separate to this, each couple contributed a small ‘buy-in’ sum of money through our respective family trusts. My husband and I took out a personal loan (within our trust) for our ‘buy-in’ contribution. The other couple had the cash to contribute through their family trust.

These ‘buy-in’ amounts are recorded as a ‘loan’ to the company. Because they exist, we have not been taking a dividend when there is surplus cash flow. Instead, when the business can afford to pay an amount to each family, it has been treated as a ‘loan-repayment’ for the ‘buy-in’ money that was contributed at the start.

This business has two directors – one person from each family unit. These directors take a regular PAYG wage.

BUSINESS TWO:

This company was created as the entity to purchase a block of commercial property. Our lawyers had much deliberation whether to purchase the property via a tax partnership between the trusts or purchase it in a company. A company was chosen in the end for the added asset protection.

We have purchased this land with the same couple with whom we own our primary business. This block of land will become the business premises for our primary business.

This company exists outside of our family trusts for asset protection. As with the first venture, the company is owned 50/50 between the families and has the same two Directors.

 

INTENTIONS FOR THESE JOINT VENTURES: Who knows what the future will bring. At the moment, collectively, we would love to continue to build these businesses up and eventually, we would like to sell them together for a comfortable profit.

 

OTHER CONSIDERATIONS

Our PPOR has been moved into the name of the spouse that does not act as a Director – for asset protection.

My partner and I have our own share trading portfolio inside of our family trust.

Personally, I work very little in our existing businesses at present. I am primarily a stay-at-home parent. When my kids are bigger, I would like to start my own side business doing web development from home. I would start this venture as a sole trader – unless advised otherwise.

 

Questions for Terry:

1) Is it a good idea to have our share-trading portfolio inside the same family trust as our main business? I’m not sure if this is a mistake or whether it’s okay because the trust only owns half shares in the main business.

2) Was a separate company the best way to purchase the block of commercial land?

3) Currently, I invest small amounts of money regularly into the stock market (ETFs). This money is taken from our everyday personal account and deposited directly into our brokerage account (SelfWealth). Any money that the share portfolio makes is deposited directly into the brokerage trading account and re-invested with the next purchase parcel. Money that goes to the brokerage account – and money that is received as distributions – never flows through the trust account at all. Is this a problem when the share trading account is held in the name of the family trust?

4) Within the main business, each director takes a PAYG wage. Is this the optimal way for them to be receiving a salary? Or should they be taking remuneration as a dividend? What’s the tipping point between taking a wage (which is a business expense for tax) becoming outweighed by the benefit of dividends (which have franking credits)?

5) My partner and I took out a small loan within our family trust as our ‘buy-in amount’ for our primary business. When this business has surplus cash flow, we take money out as a ‘repayment’. However, we redirect this money into our home loan offset rather than paying down the tax-deductible bank-loan debt in our family trust. Is this allowed, or are we doing something wrong here?

6) Down the track, when I start my own web-dev business as a side hustle from home, is there anything to watch out for and is sole-trader the best way to begin?

I hope this all makes sense! …I know we have a lot going on!!

I can clarify anything that is not clear. I understand if it’s not podcast material!!

All the best, and keep up the fantastic work,

-L

Firebug’s Answer


(7:20)

Question (35:36)


Hey AFB!
Thanks for the recent Pod with Terry on trusts! It was very heavy but very insightful, I’ve always found similar pods/articles to be too broad-brushed or high level to be as actionable.

I just have a question regarding the actual distribution of income in a discretionary trust. Let’s use yours, for example.

You mentioned your retired parents are beneficiaries of your discretionary trust – how then do you make sure that the $18K (or whatever the tax-free threshold worth of income is) can still be used by you when it is “distributed” to them? (quotation because Terry mentioned that the transaction doesn’t necessarily have to be made).

In other words, how do I distribute it to the beneficiary on a tax level, but keep the money for me to use/spend?

Sorry for the long paragraph, but really hope you can help out on this one. Thanks!

-Calvin

Firebug’s Answer


(35:36)

Question (41:36)


Can you ask Terry about the consequence of buying an LIC in an individual name vs. trust and then distributing income via the trust, i.e can we give each kid 416$ but no attached franking and instead give the franking to the higher income earner?

If the portfolio generates $3,500 worth of fully franked income with franking credits, can we give child 1 $416 and child 2 another $416 while spouse gets the remaining 2668 plus all the franking credits?? or better still 2668 to the spouse and only the 1500$ franking credit to the husband higher income earner??

-Mohammed

Firebug’s Answer


(42:38)

Question (43:36)


I am currently in the highest marginal tax bracket 47% and working as a sole trader/contractor.

My wife works part-time as she has to take care of our child. I understand as a sole trader/contractor, I am under PSI rules for tax purposes and I cannot contribute my income to my wife and child via family trust because of PSI rule.

I was wondering with my current situation, are there any rules that can be bent to be under PSB so that I can open a discretionary family trust and distribute my income to my wife. Many thanks for your both time.

Kind Regards

-Mike

Firebug’s Answer


(43:48)

Question (45:11)


I would love to hear about Estate planning/Will process for families with international assets to ensure that global assets pass on to the kids. Also, what’s the best way to nominate an international guardian for minors to cater for the unfortunate scenario of both the parents passing away.

Cheers

-Amit

Firebug’s Answer


(45:40)

APR22 Net Worth $1,030,743 (-$9,748)

FEB22 Net Worth $1,008,790 (-$4,360)

I publish these net worth updates to keep us accountable, have others critique our strategy and show that reaching financial independence in Australia is very doable without winning the lotto, having a high paying job or inheriting a wad of cash. The formula to be able to retire early is simple, the hard part is being consistent and sticking to a plan for many years. The table at the bottom details our entire journey from being $36K in debt all the way until we reach πŸ”₯


The wife and I surprised my parents with a trip to Daylesford in February for the old man’s birthday. It was a bit of a combo trip to also see my sister who has recently moved to Bendigo.

Daylesford

Mrs FB has dropped to a 4-day working week this year and the extra day off has really been a game-changer for her. One of the best parts about having a long weekend every week is being able to plan little 3-day get-aways (I’m ironically finishing up this post on one said getaway). We left Latrobe Valley early on Friday morning and came back on Sunday night. I even managed to fit in a coffee with a Firebug reader in Ballarat which was really nice.

That’s the beauty of slowly scaling it back. Even just one extra day in the week gifts you back 52 days a year (not exactly 52 days with all her teacher holidays but you get the idea). Even if it’s just to book appointments and get some stuff done. Half the time Mrs FB sets aside the Friday to organise and prep for the following week and we wake up Saturday morning with all the chores done. It’s a really nice way to enjoy the weekend instead of trying to cram in everything on Sunday just to wake up Monday morning and start the process all over again.

I also had my first BJJ (Brazilian Jiu-Jitsu) tournament in Feb which was such a crazy experience.

For those who haven’t heard of BJJ before, Wikipedia describes it as:

Brazilian Jiu-Jitsu is a martial art and combat sport based on ground fighting and submission holds. BJJ focuses on the skill of taking an opponent to the ground, controlling one’s opponent, gaining a dominant position, and using a number of techniques to force them into submission via joint locks or chokeholds.

Or as I like to explain it to my wife… “You’re basically trying to kill the other bloke without striking” πŸ˜‚

I first started training BJJ in late 2018 after me and my mate finally decided to pull the trigger and actually go down to a local MMA gym and give it a go. We were huge fans of the UFC and MMA in general but had never trained a martial art (I’ve done a bit of boxing but nothing serious).

I only trained for a few months in late 2018 before Mrs FB and I left to live overseas for two years. I originally wanted to continue my training in London but life and travelling just got in the way. I was lucky to get in a few gym sessions and a run during the week let alone BJJ training.

What attracted me to BJJ was the ‘problem solving’ nature of it. I’ve gravitated towards puzzles my whole life. I love chess, my favourite video game of all time is StarCraft which is extremely strategic and my professional work in data is literally solving technical problems for money.

A lot of people think martial arts can be too violent and just for meatheads but there’s also a softer more spiritual side that’s deeply connected with meditation and yoga (think Shaolin Monks for example). I like to think of meditation as a form of martial arts and struggle against your own mind, yoga is a martial art against your body and BJJ is the physical manifestation against another person. They’re all related and I’ve been told that a lot of top BJJ practitioners are right into mediation and yoga too.

We came back home in 2021 and BJJ training was high on my list to get back into. It took me a few rolls to bounce back to my previous level and other than the lockdowns we had last year, I pretty much have had a solid 12 months of training plus the 3 months before our Euro trip. The next step was to put our training into practice because my mate and I always had aspirations to compete.

It’s one thing to train, but it’s another to actually go out there and wrestle someone giving 100%. To say it was nerve-wracking leading up to the comp is putting it lightly haha.

The day of the tournament was a relief because I had trained pretty hard 6 weeks leading up to it and I had been having a bit of trouble sleeping (probably overthinking everything that could go wrong lol).

We had 4 people from our club in the comp and the way it works is there are different divisions depending on your skill level, weight and BJJ style.

I was competing in both Gi (the pyjama looking outfit πŸ₯‹, also called a Kimono in Judo) and no-Gi (tights and rash vest, pictures below) in the 77kg white belt (beginner) division.

It was a round-robin competition which I would highly recommend to anyone looking to compete. I really like the round-robin format because you’re guaranteed 4 matches even if you lose each one. Our coach has told us stories when he was competing that he would drive all the way up to Melbourne, lose the first match in a knockout tournament and have to drive all the way home πŸ€ͺ.

I got to the comp, weighed in and started stretching and warming up. Our best guy from the gym (a blue belt) was up first and I was in the coach’s chair which is basically a spot for someone to yell out helpful things and let them know if they’ve scored points or not.

There are three ways you can win.

  1. The match finishes (5-minute matches) and you score more points (points are awarded for dominant positions)
  2. Your opponents submit from a choke or joint lock (they’ll usually tap or verbally submit)
  3. You choke your opponent unconscious and the ref steps in

So the match starts and it’s pretty competitive but the guy from our gym eventually loses on points after 5 minutes. I was surprised to see him limping really bad once the match finished and even more surprised to see his foot had turned black and blue… he broke his foot somehow during the match 😱

So this was just about the worst thing to have happened before my first match because you could imagine what that did to my confidence. Here I was, brand new to tournaments and already crapping my dacks. And then our best guy goes out there and breaks his foot… 😐

I helped him to the side where he was ushered off in an ambo, and then my name was called to mat 7.

My opponent and I stepped on the mat and the ref yells:

“Are you ready? Are you ready?… FIGHT!”

I don’t think I’ve ever had an adrenaline dump quite like it before. I know there’s a ref and rules but in the heat of battle without any prior experience, you just forget everything.

There are actually some similarities between holding your nerve in sports and keeping it together during a market downturn. How often do we hear from seasoned investors that buying during a downturn is one of the best things you can do. Buy when there’s blood in the streets etc. But it’s a different story when you’re actually in the thick of it.

I had trained and refined my strategy for 6 weeks leading up to the comp. But when my match started, my opponent gave me a different puzzle to solve than what I had been practising. This threw me off my game completely and I needed to make an adjustment but I didn’t have the experience/confidence to do so. That’s why you always see the best UFC fighters and boxers making adjustments mid-fight. They recognise when something isn’t working and under extreme pressure are able to try something different to solve the puzzle.

I fumbled around for most of the match and then somehow managed to land a double leg takedown to secure 2 points and win my first match. After that first one, I felt a lot more comfortable and I got into my groove during the next few matches.

I finished the comp coming 3rd in Gi (πŸ₯‹) and 1st in no Gi (🚫πŸ₯‹). My two mates both took home 2nd in their respective divisions which made it a very successful day for our school (other than our blue belt friend).

Here are some pics from the tournament.

My first opponent had neck tats… I was so nervous lol

 

Me almost getting guillotined

I’ve also been hitting up the local MTB trails with my nephew lately. It’s such a luxury to be able to go riding during the week when no one is there.

MTB riding at the pines

My nephew sending it!

And lastly, we finally got around to putting in the new front garden. I can’t believe how expensive plants are πŸ’Έ but must say that it’s looking 100 times better already. Really excited for the trees and bushes to grow a little.

New garden

 

Net Worth Update

A pretty boring update for February.

Our shares portfolio went up ever so slightly and Super dropped a few grand. I also had a smidge over three weeks off in January which meant my income for February was pretty low. All of that combined meant that we went slightly backwards in Feb from a financial point of view BUT I feel from a happiness point of view, things have never been better and that’s the important metric 😁

No changes to the FIRE portfolio.

*Expenses include everything we spend money on to maintain our lifestyle. We do not include paying down our PPoR loan as an expense, only the interest
*Investment income is simply 4% of our FIRE portfolio divided by 12

It’s becoming clearer and clearer that inflation has well and truly hit our tightass household. I’ll probably keep it eye on it for a few more months before anything official but I dare say that we’ll be increasing our FIRE number of $1.25M soon. I’ll write an article about it after a few more months I reckon. Inflation was always included in our numbers but not at the level it seems to be right now. I’m aware that CPI is officially 3.5% (as of writing this article) but our basket of goods has definitely gone up more than that.

I have been religiously tracking our expenses for over 7 years now and have a pretty decent dataset I could use. It would be interesting to see how much certain areas of our spending have changed throughout the years. I swear we only use to spend around $350 bucks a month on groceries. Now it’s closer to $600.

Shares

The above graph is created by Sharesight

No purchases in February. Building up a bit of a cash buffer for a new car atm

 

Networth

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