Aussie Firebug

Financial Independence Retire Early

Podcast – My Mate Jimmy

Podcast – My Mate Jimmy

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Summary

Aussie Firebug has been discovered!

Late last year I woke up to a message from someone who lived in the same town as me saying they knew I was the Aussie Firebug and that my secret was safe with them…

I immediately jumped to the worse conclusion thinking maybe my boss had figured it all out 😱.

But it ended up being my mate from high school who as it turned out, was just as crazy about all things personal finance and investing as I am! It was my mate, Jimmy!

We’ve had countless chats at the pub multiple times about a whole bunch of stuff since that faithful message.

Today’s episode is two mates who went to high school together having a good old yarn about financial independence, investing, ETFs/LICs and much more.

Some of the topics we cover today include:

  • How Jimmy discovered my alter ego ‘Aussie Firebug’
  • Jimmy’s story about financial independence
  • Real estate investing
  • How Peter Thornhill ‘cleared the fog’ for investing in shares
  • Jimmy’s strategy that looks at the number of units of a fund as opposed to what the fund is worth when setting the target
  • ETFs/LICs

And much more!

 

Show Notes

MAR19 Net Worth $641,673 (+$3,066)

MAR19 Net Worth $641,673 (+$3,066)

I don’t even know where to begin with this months update. So much has happened that it feels like it’s been a lifetime since I’ve logged in to give you all an update on our journey.

I guess I’ll just go in chronological order but I may have a few sidebars here and there.

We were still in Vietnam at the start of March and I pretty much covered all the things we did there in our Feb update… I don’t think there’s anything noteworthy on the last few days.

Oh, one thing I will mention is that we couldn’t really shop anywhere in SE Asia because we were backpacking and didn’t have any checked luggage. This is a much more convenient way to travel around but you sometimes see some killer deals and want to buy stuff but can’t. We had already well and truly maxed out our 7kg carry on limit multiple times when boarding (most of the time getting away with extra weight).

So anyway, because our last stop was in Hanoi and the next two flights (Dubai and London) included checked luggage for both of us, this meant that we could buy a suitcase and do a big shop before we eventually ended up at our new home in cold old England!

We ended up with this haul after one shop at the night markets costing a total of $400 AUD!

The best buys from everything had to be our ‘North Fake’ jackets! They are so incredibly warm and if you look really close you will see the logo is slightly suss but honestly you can’t even tell. We have been wearing them almost daily now in cold AF London and they have been the best! No signs of dodgy materials… yet. I was also really happy with the fake Daniel Wellington watch, looks great and cost around $10 AUD.

We then packed our bags and finished our SE Asai adventure and boarded a flight to Dubai which was a nice in-between stop on the way to England but was a place I had really wanted to see for a while too.

You can go snowboarding in the mall when it’s 40+ outside

A two-story aquarium in the mall

 

 

What can I say about Dubai… it was a big shock paying western prices again after we got so used to SE Asia, especially the cost of alcohol!

Dubai definitely lived up to the hype in terms of big is better and a lot of flash and bling everywhere. Each time I looked around at the buildings it was as if every single architect was trying to outdo each other. Many of the 100+ buildings we saw would have probably been world famous if it had been built in Melbourne just because they were so nice looking and unique. But over there it’s just another skyscraper. Everything is so new and luxurious it’s crazy!

I finally met up with someone who reads the blog in Dubai too which was extremely cool! This person reached out to me months ago through my contact me page and I can’t remember the exact details but they mentioned they lived in Dubai and if I was ever traveling through I should shout out.

Well that’s exactly what I did and we caught up in person for a beer

We also went out for dinner with our partners and it was a lot of fun to finally chat with other people from the FIRE community in person.

And you couldn’t mention Dubai without bringing up the Burj Khalifa AKA the world tallest building.

Photos do not do this engineering feat justice! It’s simply incredible to look at something so insanely tall and realise it was built by humans. We have come a long way from the cave!

We were only in Dubai for a few nights before jetting off to London which took roughly 8 hours.

It’s been an absolute whirlwind since landing in London. I really wanted to prioritise finding a job ASAP and not sightseeing straight away. There’s only so much holidaying I can enjoy before itching to get back to work and have some income rolling in again. It does help that I’m getting long service leave until June but still.

Mrs. FB teaching gig is super easy and the pathway for teachers from Australia to London is well established and very mature. They even have a bloody app where you just tick on you’re available and you’ll have school contact you. Super easy!

So she was working within the second week we got there which was very easy. My work, however, was a little bit more unknown.

I wanted to see if I could get into contracting in London. I had always seen that there was plenty of money to be made in Melbourne, but that of course came with a much higher cost of living so I never really entertained that idea. But since I was moving to one of the worlds biggest and most popular cities I thought I’d investigate a bit more. Contracting usually offers a very competitive day rate and is perfect for a travelers lifestyle. You get paid well for short periods (3-6 months) and then you need to find more work. This could give us some flexibility and allow time for traveling Europe.

I updated the resume and started applying for contracts. The first week was a bit disheartening because I hardly had any responses and wasn’t even sure if I was experienced enough to be applying for these lucrative contracts. But I was determined to land one of these jobs and continue doing my research.

My luck turned around in my second week when I found a fanatic website that was made for IT contractors in the UK. I was doing so many things wrong and the forum there helped immensely.

I also ended up connecting with another reader on the blog who was already a contractor here in London. It was great to chat to an Aussie who has made the move over here and had successfully secured a contract and also just happened to be apart of the FIRE community. We chatted over a beer of course.

Another beer with an Aussie Firebug reader in London

I changed my resume around and created my own limited company as an IT consultant which costs around £1,000 all up (with all the insurance and everything). It was a bit of a gamble but it’s what’s needed if you want to land the job.

I ended up with 2 contract offers by week 3 each paying £500 a day and both for 3 months 👊

There’s also an extremely big tax advantage for limited companies as opposed to PAYG which I’ll probably go over in another post. The dividend system is completely different over here and the UK pay way less tax in general than Australia which I am constantly reminded is one of the highest taxed countries in the world.

The other big piece to the puzzle was finding a place to live. I had dreaded spending days on end looking at apartments and rooms only to be disappointed. I knew this part of our trip was going to be hard. The rent is so much and you get so little but it’s the price you pay to live in London I guess.

Fortunately, we got extremely lucky and found a place that was perfect in just the second go! Right near the train station, 25 minutes out of the CBD, cool places all around, reasonable rent (£900/m), came with an ensuite which Mrs. FB had said long ago was a non-negotiable and most importantly… came with great housemates who we have been living with now for 3 weeks.

The rent of £900/m is a tough pill to swallow and was right at the max of what we were going to pay. But the place is brand new (we’re legitimately the first to live here) and it’s a killer area so it makes it easier… it’s still more than double of what we were paying back home though 😢

Setting everything up here in London has been exhausting. Just navigating around, finding a gym, working out the trains, setting up a bank account and all that takes time and energy. After nearly 4 weeks I only now just feel like we’re getting settled and back into a routine.

Traveling takes a toll on your health (for me anyway) but you gain some much valuable experiences from it. I’m honestly loving getting back into the routine of work (ironic for this blog), gym, eating healthy and a normal sleep schedule.

I have also got my computer setup finally so I can get back to releasing content on a more consistent basis.

That’s all the major things that have happened for us over the last month. Time to take it a bit easier now and see if we can start sending some £££ back home to continue our investment goals! The next overseas trip is a few more months away, but we have plenty to explore here in England first that’s for sure.

Net Worth Update

It wasn’t a lot, but we escape March in the black up $3K!

The sources of income that saved us from an incredibly expensive month were my long service leave still generating $1,600 a fortnight, share returns (including some nice dividends 🤑), money made through the blog via affiliates and Mrs. FB getting paid for her teaching gig in London.

We spent a lot last month though. It’s amazing how much it cost when you move into a new place. London has Gumtree thankfully but there are still so many things you need and it all adds up. Combine that with all the costs of traveling around (buses, trains, Ubers) and it’s actually a miracle we came out ahead for March.

Most of the big stuff is out of the way now and hopefully, I can start to get the big consultant checks for the next 3 months which will help immensely. I’ve signed up with Transferwise and plan to send surplus £££ over to my Aussie account so we can continue to invest in shares whilst overseas. I’ll report on how that goes in next months update.

Properties

No changes in the properties this month.

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

We added $16.5K worth of A200 shares last month to the portfolio. MLT and AFI were at a discount if I remember correctly but I’m starting to become hesitant about the shifting laws in franking credits and just felt more comfortable going with the vanilla ETF index this month. I still haven’t made up my mind about what will happen if the franking credit refund gets axed.

All positives from last month expect for AFI. VAS had some juicy dividends for us while A200 wasn’t too shabby either.

I have seen a lot of talk online about A200’s dividends being lower than VAS and some investor have used this as a reason not to invest in A200 vs VAS. There is a perfectly good reason for A200 to have lower dividends initially vs VAS and that reason is that it’s a new fund! But it doesn’t mean that it will have lower returns. It will just have higher CG vs dividends in its first couple of years which if you ask me is perfect for people in the accumulation phase. After the fund grows to a decent size you will see the dividend yield be almost identical to VAS (slightly different because of A200 vs A300).

Networth

 

What Is ‘Retire Early’ And Why It’s The Most Important Part

What Is ‘Retire Early’ And Why It’s The Most Important Part

FIRE to me is broken up into two parts.

Firstly, you must reach financial independence (FI) where you’ll need to have enough assets generating enough money to cover your expenses forever.

This is pretty straight forward and whilst there are different variations of what people consider financial independence it’s much less convoluted then early retirement (ER).

Which is the second part to the FIRE equation and by far the most important.

I’ve done my fair share interviews for media outlets reaching out to me because they wanted to know more about the FIRE movement and what it’s all about. For some reason, I had quite a few in the last few weeks which you can listen to here, here and here.

These interviews prompted me to make this post because the question that ALWAYS comes up is why would a bloke who has 50+ (hopefully) years left in the tank want to retire?

Wouldn’t it be boring?

So I’m here to set the record straight as to what I consider ER is and why it’s the more important step!

 

What Is Early Retirement?

 

The most misunderstood and important part about FIRE has to be ER.

It’s mostly because the word ‘retire’ has a certain connotation with most people. If you actually look up the definition of retirement you will get different answers depending on which dictionary you are reading.

Retire Early in a FIRE context does not mean you stop working!

I honestly could think of nothing worse than to sit around all day doing nothing for 50+ years and I’ve yet to hear about anyone who achieves FIRE handing in their resignation letter only to sip Pina Coladas by the pool and play golf all day until they die.

Meaningful work that ignites a passion is awesome. I want to do work that brings purpose and meaning to my life forever. But unfortunately, the fact of the matter is the majority of today’s society (myself included) sets an alarm to go to their place of employment to earn money.

We trade time for money.

Are there people out there that would do their job for free?

Sure.

Are there many?

Doubt it.

You cannot do some forms of meaningful work without first having achieved financial independence. Volunteering full time is one example.

Other forms of meaningful work may actually turn a profit. Maybe you always wanted to have a go at that coffee business but could not afford the risk financially. FIRE opens up these doors and allows you to pursue your dreams that you wouldn’t have otherwise had the money to take on.

If you think that people who have achieved FIRE are phonies because they still do paid work I have great news for you! Turns out there is an entire group of you guys dedicated to upholding the semantics of the word retirement called the internet retirement police! At least you’re not the only one…

My interpretation of retire early was never about not working. It was always about retiring from the rat race and having the freedom to pursue meaningful work of my choice whether that is paid or unpaid doesn’t matter.

Retire is probably not the best word but FIRE is a catchy acronym and it’s stuck so just deal with it.

If you don’t like using the word retire that’s understandable. I myself have often thought that it doesn’t quite describe what FIRE is all about.

But what I think we can all agree on is that simply reaching FI should not be the end goal which brings me to discuss…

 

Why ER Is The Important Part

Think back to when you first discovered FIRE, or even just the concept of financial independence.

If you’re anything like me, the thought of having all the money in the world was not the exciting part. It’s what having that money could do for your life. The freedom that financial independence can grant is something that has never left my mind since I stumbled across it ~6 years ago.

Is there any point in reaching FI without using that freedom to live your dream life?

I know plenty of people at my old job who have reached FI but are still miserable in a job they don’t particularly enjoy!

You know the type.

Been at the same steady job with great benefits for 35+ years. Pretty conservative type operator who has tucked away enough Super to comfortably fund 4 retirements yet has lost all enthusiasm, motivation and what seems to be general happiness in the last few decades but still rocks up every Monday and complains the whole time.

oldman

You often wonder to yourself, why the f is old mate still working if he clearly isn’t happy here and has enough money to retire…?

That’s a very good question.

Maybe they are a creature of habit. Maybe they don’t know they are FI yet and think they still need to work. Maybe they are super conservative and are worried they will run out of money.

Or maybe they just don’t know anything else and are scared that they will lose purpose in life.

I have no idea about other peoples situation but if someone was truly FI and too scared to quit their job because they feared the unknown… they have missed the entire point of financial independence and FIRE in my opinion.

Everyone who reaches the end goal will always have to take a leap of faith of some sort. Maybe you have crunched the number for a standard 4% withdrawal rate or maybe you are a little more conservative and have opted for a 3% rate.

Regardless, all of us will reach the point where we will have to make the decision and hand in our resignation letter to start our new careers in the exclusive and more exciting field of ‘whatever makes me happy’. This career is not fueled by monetary gains, status symbols or power but rather what brings the most happiness to your life. If you get paid for this passion, sweet! Maybe you can donate this extra money to a charity which will almost certainly bring you even more happiness.

If you’re one of those lucky ones who thoroughly enjoys their current job and would happily work it for free then hats off to ya, you’ve already reached the end goal in terms of ER! I really wish everyone was in that position but the truth of the matter is they aren’t. And failing to RE to move onto more fulfilling, meaningful and enjoyable work is such a tragedy.

If you reach FI but continue working a job you don’t like and fail to RE, what’s the point?

 

Don’t Wait Until It’s Too Late

Just one more year…

Let’s tuck away just a little bit more so we definitely won’t run out of money in retirement…

This is a dangerous game to play but completely understandable and something that I’ll almost certainly do as well. But at some point we must trust our planning, numbers, and ability to adapt to the situation should something disastrous happen post rat race.

The biggest risk in life is not taking one!

Once you have reached FI, complete the journey, pull the trigger and RE to start the new chapter in your life.

I’ve haven’t heard too many people ever regretting pulling the trigger early, in fact, most say they should have done it earlier!

Have you retired yet? Did you wish you did it earlier or was it something you regretted? I’d love to know in the comment section below.

 

Oh and I’ve now decided that every good blog should have a sign-off.

So until next time…

Spark that 🔥

FEB19 Net Worth $638,607 (+$16,652)

FEB19 Net Worth $638,607 (+$16,652)

Our travels continued in February stopping by Cambodia and spending the majority of our time in Vietnam.

I know I said this is not turning into a travel blog but some photos are too good not to share, so please bear with me 😅

Temple at Angkor Wat, Cambodia

Ha Long Bay, Vietnam

Paradise cave, Vietnam

Hải Vân Pass, Vietnam

It’s sometimes hard to truly appreciate how good we have it here in Australia until you spend some time in a third world country. Just little things that we all take for granted like clean drinking water, maintained roads, social safety nets etc. these are all little things that you don’t really ever marvel at back home. They are just there and for my lifetime anyway, have always been there.

I had a suit tailor made in Hội An which cost me $220 AUD. This was a little bit more pricey then I was expecting but after reading a lot of reviews it seems like there are a lot of dodgy tailors there and it’s better to get one made from a reputable tailor. I mainly needed it for job interviews in London but, like, where else would I have got a perfect fitting suit for $220 AUD. Crazy good value if you ask me!

One other thing I have to mention is our experience in a 5-star resort for two nights. It’s a funny thing to say on a blog like this, but yes, we booked a 5-star resort during our motorbike trip up the east coast of Vietnam.

Why?

Because it only cost us $45 AUD a night.

I mean… $45 AUD for 5-stars? C’mon now, we’re getting silly Vietnam. That’s too good to pass up!

The place was called the Vinpearl and we actually stayed one night at their hotel in Ha Tinh, and one night in Thanh Hoa.

These places are sort of in the middle of nowhere but we passed through them on our motorbike journey so it was perfect. Let me tell you, the included breakfast alone was worth the $45 bucks. They have a kick-ass infinity pool that overlooks the city and a spa that you’re allowed to use which includes jacuzzi, sauna and steam room. The rooms themselves are huge and it was just so nice to relax in a place like that for a few nights. Yes, we could have stayed in a hostel for like $7 bucks but it was well worth it IMO.

SE Asia has been a blast for the last month and a half and now it’s time to have a quick stopover in Dubai before we touch down in England.

I’ve been looking for jobs but haven’t had much luck yet. A lot of recruiters/companies want to meet me first, but being in SE Asia makes it impossible. Hopefully, once I land I’ll be able to have a few interviews and meetings and get my foot in the door.

Does anyone out there have any experience working in IT in London or have a contact? I’d love to hear from you if you do. Just drop a comment with your email and I’ll follow you up. Happy to chat about anything else while we’re at it too 🙂

Oh, and the Facebook page hit its 1000th like sometime over the last few days

There’s something really satisfying about that little 1K!

Net Worth Update

The sharemarket bounced back last month with Super and shares contributing to the $16K bump for Feb.

Our spendings and income pretty much cancelled each other out which was great. So while we weren’t able to add anything to the net worth in cash, we didn’t go down in that department either.

I’ve been really happy with our spendings over the last month. We’re down to one wage atm because Mrs. FB last paycheck was in January since she’s a teacher and even though we are travelling around and eating out every night. We actually spent less last month than we usually do when at home 😱

I know SE Asia is cheap, but with all the things we’ve been up to, eating out every night, drinks etc. not to mention booking in a few flights for later this year, I did wonder what it would come to for the month of Feb (since I’m not able to check pocketbook every few days like I’m used to).

And I say this with 100% honesty, we have not restricted ourselves in the slightest. If anything, we have been overly indulgent (it’s a holiday after all 😄🌴).

There have been a few activities we’ve seen others do that can blow out the budget which didn’t really appeal to us anyway. Stuff like parasailing, jet skis, theme parks etc. wasn’t the reason we travelled to SE Asia.

Properties

No changes in the properties this month.

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

 

 

 

 

We added around $15K to Milton last month as it was trading at the highest discount compared to AFI.

Everything was in the black except AFI which went down overall but had a very nice dividend payout, so thank you very much 🙌

Ended the month with around $1,300 in dividends which is really nice too.

 

Networth

 

Financial Goals 2019

Financial Goals 2019

Just like last year, and the year before that. It’s time again to take a step back and see what we achieved over the last 12 months and set new goals for 2019!

 

2018 GOALS

Have a savings rate of 65% or better 

Achieved = No ❌

 

Total expenses for 2018: $60,742

Total money made (post-tax): $142,957

Savings rate for 2018 = 57.5% 😓

This one isn’t really a surprise for us. The two big factors that lead to an increase in spending was all the flights and accomodation we booked for our trip overseas and Mrs.FB having her wisdom teeth out was not cheap either. Even though we earned $12k more this year than the previous, as always, the expenses are the biggest factor in a healthy savings rate and not your income!

I’m not overly devastated by this because I know that these big expenses were sort of a one-off and not exactly lifestyle creep. Tbh, 55% is not that bad considering how much we booked for our trip. If I cut out the money we spent on flights and accommodation our savings rate jumps to 67%… Not bad.

 

Reach $200K in ETFs

Achieved = No❌

 

Technically this wasn’t achieved. We had around $194k in ETFs/LICs at the end of December 2018. But we could have had heaps more in there because we sold IP1 last year and currently have a big cash reserve we’re drip-feeding into the market. It also didn’t help that December was a really bad month for the markets but oh well.

If I actually remembered this goal in December I could have just put in an extra $7k to hit it haha.

Always next year!

 

Get to $550K+ in net worth

Achieved = Yes✅

 

Woohoo first tick! We managed to end 2018 at $600k mostly due to the sale of IP1. Very happy with this one.

 

Make monthly checks to the above goals as part of my monthly net worth posts

Achieved = No ❌

 

I don’t know how I forgot about this one but I can’t remember referencing these goals at all during the year. It was maybe something that sounds good last year but not something I ever think about with each months update. Maybe I’ll remember this year 😂

 

Redesign homepage and the whole site

Achieved = Yes✅

 

I changed my WordPress theme at the start of 2018 to make it easier for me to update the site and for you guys to navigate around. The older readers might remember, but the old theme was a bit clunky and for me to add things into the site use to take ages and was extremely buggy. So happy I made the switch to the new theme. Really fast and very customisable.

 

Find a Super expert to interview on the podcast

Achieved = No ❌

 

Ugh! I’m so over this one. I was really close to getting a Super expert for MONTHS to come on the show and they never did. I won’t name any names but I got over it really quick after I tried pretty hard to land some other quality guests.

So I’m changing my strategy.

If you know someone who would like to contact me to come on the podcast, then I’m all ears. But I’m after someone who will provide expert info about Super in regards to FIRE. What I don’t want is some random from their financial consulting company coming on to talk about how good their company is. It has to be specifically in regards to people looking to FIRE or FI that are close to their preservation age. SMSF is of great interest.

[email protected] if you know someone 🙏

 

Update the Australian FIRE Calculator

Achieved = Sorta yes ✅

 

I made some minor changes to the calculator last year (didn’t update the changelog) but nothing major. There are actually other calculators that are based off mine that have expanded it greatly. If you’re one of those people who has made amendments to it, please contact me as I’d love to release a better version and give you credit and some exposure to whatever site/content you may have.

I came across one version that had the ability to enter in multiple people’s numbers and stuff like that. Really cool stuff and something I’d love to get out there officially without having to further develop this myself as I’m pretty much moved on from that.

 

Get to 500 Facebook likes

Achieved = Yes ✅

 

Currently sitting on 940 likes 😁

Who will be the prestigious 1,000 like?

I feel that pages and groups have so much more authority when they hit the magical 1K mark.

Although there’s plenty out there who pay for likes 🙄. Just look for the pages who have over 1,000 likes yet only have 5-7 reactions each time they post. I take pride in saying the Aussie Firebug page has never ever paid for likes and on top of that, doesn’t have a single friend or family member liking the page. Mostly because they don’t know about it! But I reckon that’s an easy 100-200 likes right there getting the old friends and family on board 😂

 

And that’s it for the recap for the last 12 months. Heading into 2019, these will be our main focus financially/blog-wise.

 

2019 GOALS

The big financial goals are:

  1. Obtain a savings rate of 20% or better
    • I honestly don’t know if we will be able to save anything whilst on our trip this year. But that of course was never the goal. I’ve set 20% as a little goal just to be a bit more accountable. A lot depends on our housing situation and how good the jobs we’re able to land are.
  2. Reach $420K in ETFs
    • We’re putting in $15k into ETFs/LICs each month over the next 16 months from the big pile of cash left over from the sale of IP1. This means at a minimum, $165K will be going into the markets for us this year. Maybe we can continue to add a little bit from savings and perhaps the markets will do ok. I don’t think this goal is unrealistic but a lot will depend on factors outside of our control.
  3. Get to $700K+ in net worth
    • Maybe a bit unrealistic since I don’t think we will be able to save that much but you never know.
  4. Sell another property if the lending condition changes and the market picks up
    • I could be waiting a decade for this one but the two IPs are currently cash flow positive so I’m in no rush.

Website goals:

  1. Bring back AFF and aim to release an episode on a regular basis once I’m up and running overseas
  2. Release a webapp I’m been working on
  3. Get to 2,000 Facebook likes

 

That should keep me pretty busy this year.

 

 

What about you? How did you go with your financial goals in 2018? And what goals are you setting for the next 12 months?

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