Aussie Firebug

Financial Independence Retire Early

Podcast – Dev Raga

Podcast – Dev Raga

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Summary

Today I’m chatting to Dev Raga, a doctor from Melbourne who migrated from India as a child in the 80’s. Dev runs his own podcast at devraga.com and is breaking the stereotype of doctors not being the best with money with his educational content on various personal finance topics.

We chat about Devs upbringing, what motivates him to become financially independent and also unpack what the journey looks like to become a doctor in Australia. You might be surprised to hear how much Doctors earn straight out of uni and just how many years it takes.

Some of the topics we cover:

  • Dev’s background
  • How long does it take to become a doctor and when do they start earning the big bucks?
  • How Dev became interested in FIRE
  • What Dev invests in
  • The Dev Raga Podcast

Show Notes

 

Transcript:

Heads up grammar Nazis, the following transcription is half human half machine and not 100% perfect so expect a few typos and errors…

 

Aussie Firebug: Hi, Dev, welcome to the podcast. Thank you so much for coming on.

Dev: Thank you for having me.

Aussie Firebug: For those out there who don’t know who you are, Dev, why don’t you give an overview of who you are and where you’re from?

Dev: Yeah, sure. I rise. So my name is Dev. I’m based in Melbourne in Australia. And a bit of background about myself. I’m a medical professional. I’m actually a practising doctor. We arrived as a child in 1990 from India with my family. And this was this was at the time I the start of Australia’s recession. So I was basically a 90s kid. And since then, you know, my patients, which I see are actually born in the 90s, which is pretty scary, given that, you know, technically I’m a millenial.So I work full time in the field of field of medicine. A part from medicine, my passion really is finances and teaching since I’ve been in medical school. So  this sort of is a sort of a part time gig, which which I’m really interested in.

Aussie Firebug:Yeah, nice. Now to your doctor from Melbourne, which is really interesting because there’s a bit of a stereotype that doctors are bad with money. So I have to ask you, first of all, is that stereotype true in your opinion?

Dev: Yeah, it’s interesting, look, doctors do struggle with the concept of money and finances, and I do get a lot of questions from doctors who can get quite easily confused with saving or investing or debt reduction or financial principles on a guess which which can be quite a surprising thing to find because when you think about it, most doctors did reasonably well at school and then went to medical school, which wasn’t generally easy to get into, and then went on to become specialists. They are Generally quite a bright bunch, but a lot of them also don’t have the slightest clue about finances or money. So I think the general stereotype, although sounds a little bit extreme, but in my sort of personal experience from the questions and the types of questions that I get from doctors and sometimes nurses, yeah, a lot of them don’t have much of an idea about money or finances.

Aussie Firebug: It’s really interesting because like you said, everyone knows how much schooling you have to go through to become a doctor and yeah, it’s usually the bright, the brightest people go and get the right sccores do the exams and become doctors. So it’s yeah, it’s very, very weird that there is that stereotype that seems to be a true that doctors are perhaps not interesting in finance maybe. Is that something that you’ve come across?

Dev:  I think if you look at a life of a doctor or how you become a doctor, for example, is a fair bit of temptation for doctors to, you know, as soon as a graduate, you know, by the fancy cars or big homes. I guess thinking about my sort of medical career, it was six years of medical school. Then you kind of become a doctor, called an intern. You haven’t really seen any money until then. So there’s a fair bit of temptation to spend money and buy things you probably don’t really need. And one of the things that I find interesting is when I became a doctor, the skills as a doc doctor or even as an academic doctor are not easily transferable to the world of finances. So the assumption that being smart to get into medicine automatically equals being smart with money is quite incorrect.And, you know, many doctors get into the habit of really focusing on their career and subsequently sort of leave their finances on the back end, on the back track and not really think about it actively.

Aussie Firebug: Yeah. And I guess that’s true for a lot of professions, not just doctors. What my sort of confusion there and I think a lot of people just assume, yeah, like you said, they’re usually the smartest people or the brightest bunch of people. So you would just put two and two together and think really smart people are good with money, but it doesn’t necessarily work out that way, which is really interesting.

Dev: One of the things that I get asked a lot, actually, you know, even in it when your consulalting patients, is there is quite a misconception with patients sometimes sayin “oh, you’re a doctor, you must make a lot of money. You must not even think about money because there’s so much money around”. And that’s a sort of general conception that patients of the general public have in terms of doctors, you know, big houses, fancy cars, happy family, all that sort of stuff. In a lot of cases, from certainly from a financial point of view, that’s that’s actually not true. I’ve had some doctors have contacted me who are in financial strife just and sometimes I wonder about how did you go so wrong or how did you get the basics so difficult?

Aussie Firebug:Do you think there’s a bit of keeping up with the Jones amongst the medical professionals?

Dev: I think there is some element of that, but I think a lot of the element is just the doctors just not concentrating on on money per say. It is a bit of a taboo topic in the medical profession to discuss finances and money. The vast majority of doctors don’t do medicine to make a lot of money despite what a lot of people might think. That’s actually not true. A vast majority of doctors do it for the right reasons. But this byproduct of that is if you are a great doctor, then you will get a lot of patients. If you see a lot of patients, you will make a lot of money. Then you become a great doctor because you’ve seen a lot of patients. You’ve far more experience and the average doctor. And of course, you see a lot of patients and you make a lot of money. It’s a bit of a cycle. And I think that’s where you can get quite busy and quite engrossed in your profession and not really focus on your finances. And I think to your point, there is a bit of keeping up with the Joneses, but there’s also a fair bit of, look, I’m not very good at finances, I’m very good at medicine. So therefore, I’m going to go out and let my accountant deal with it or let myAdvisor  Deal with it and not really spending the time to learn about finances themselves. And I think that’s a real issue. And of course, in any medical school finances is not taught. And I think in any Australian university degree, finances are not taught. And I think the first time a doctor may have some sort of inkling about learning about finances is when they actually become a consultant, which is, you know, six years in medical school, maybe up to sort of six to 10 years of postgraduate training.You’ve done all that training. And eventually there’s probably a, you know, two or three hour seminar about how to set up your private practice. And they’re talking about finances and trust accounts and all that sort of stuff. And that’s sort of gets squeezed in when perhaps that should have been discussed quite early in the career.

Aussie Firebug: You know, that’s super interesting for me to hear. I’ve I’ve actually had a few friends that have gone on to be doctors, but they weren’t really close friends. So I’d like to get the information from a doctor. How does it work? If you want to become a doctor, you go to university, how many years or how long does it take from you?Study uni to actually become a doctor? And what is sort of the salary progression like? Because people do think as soon as you become a doctor that you must be minted earning hundreds of thousands of dollars, which assuming that you do eventually. but what sort of the how many years is it take to get to the big bucks, 

Dev:It’s a good question. So certainly in Australia there are two pathways for medicine. One is the undergraduate pathway, which is fast evaporating. I think a lot of the medical schools are converting to the American style post-graduate pathway. So for ease of ease of clarity and future proofing this podcast episode, perhaps we’ll talk about the postgraduate pathway. I went through the undergraduate pathway but not many universities offer that anymore. There are some who do say if if you if you took the postgraduate pathway, you know, after year 12, you get into pre-med and sciences, which is usually three to four years. Then you’ve got to sit an entrance exam called the GAMSAT or and and sit an interview panel. And if you’ve got in the first attempt, then medical school is generally about four years after your first degree. So you’re already looking at the earliest if you did a three year science degree. You’re looking at the earliest finishing up medical school is about seven years or so. Now, if you took the old undergraduate degrees, which I did, which is around six years. So you’re sort of on par with that. Once you’ve done the seven years of training, you need to do what’s called internship, which is kind of your apprenticeship really, where you get assessed every sort of three months or so. And subsequent to that, you become a resident medical officer or hospital medical officer, depending on which part of the country you’re from.So then you become a doctor without having to have active supervision so that when you’ve finished your internship. So now we’re probably about sort of eight, nine years down the track.And then you’ve got to start thinking about what specialty you want to do. Now, the shortest specialty in Australia. If you’re lucky to get in first attempt is general practice. You still need to do a post-graduate training for that, which is at the very least three years. So the shortest pathway to becoming a specialist in Australia would be eight plus another three years equalling about 11 years or so. Now, if you were looking at other specialties like surgery, opthamologist, a gastroenterology and all this sort of subspecialties you’re probably looking at about sort of 14 to 16 years, at least sometimes even longer. Now, the difficulty about medicine is that you’re constantly having to sit exams. So even if you get into a postgraduate training programs, you need to sit an exam to get in. You will get assessed every six months.And after you finish your training, whether it be general practice or other super specialty programs, you will need to sit exams during your training, but also sit exams at the end of your training and then go on to exit exam. So a lot of special specialist colleagues have that. I guess one of the what we are sort of called the bottleneck and what tends to happen is that either you either never get into a program or you get into a program, then you kind of sit these exams, which hopefully you’ll pass the first attempt.Now, most people probably will pass the first attempt depending on the specialty, but a lot of them won’t. So if you got through medical school, got through internship, got through residency, got through registrarship all in one hit without having to restart anything, you’re looking at at least 11 to 16 years depending on what specialty you choose.

Aussie Firebug: Well, that it is. That is mind boggling. At what point are you actually earning money? Is it that when you get into the the officer stage?

Dev: You start earning money as an intern. So they’re asked basic salaries for interns across Australia depending on the state.So you’d find that the populous states like Victoria and New South Wales with a lot of interns tend to get paid the lowest. Whereas if you went to South Australia or Northern Territory, your internship salary is higher because they want to attract doctors to those areas. So you do get paid as an intern and that’s all set wage. Then as a resident, your salary increases and this is all in public health. So you can’t privately practise in Australia unless you’re a fellow, unless you’ve fully completed all of your training. So you must stick around in the public system and then you start earning some money in residency. Then if you get onto the program in in surgery or general practice or physician training, then you earn a little bit more. And of course, each year the hourly rate increases depending on your experience. And that’s all governed by the enterprise bargaining agreement. So you don’t have any bargaining power on that. So it’s a little bit different to IT, where every job has a different. Hey, you can sort of negotiate. Whereas if I was a registrar in surgery at the Royal Melbourne based on year three, I will be getting paid roughly the same as St Vincent’s Hospital or Monash Health. You know, it’s all sort of governed by the public health LBA. So you do make money. But in terms of, you know, serious money, I would argue you’re probably making serious money midway through your registrarship, which is your specialty training and possibly when you’re a consultant.

Aussie Firebug: And what are we talking here like for the interns? And then the I forgot the second one.What would an intern start on? That’s about six years to get to an internship. Is that right?

Dev: I fondly look upon my internship and I think my base salary was like nineteen and a half bucks an hour or something like that. I’m not particularly sure what the hourly rate is these days, but I would say as an intern, if you’re making less than sixty thousand dollars as a starting salary, I’d be pretty surprised. And of course interns are very protective and they’re really not allowed to work more hours in what’s scheduled. Whereas when I was an intern, it’s free for all. It work, you know, 60, 70 hours a week if you wanted to. So residency probably looking at about sort of, you know, 80 to 100 thousand, depending on how much extra work you want to do. And of course, that sort of increases. And registrarsship you probably looking at, you know, sort of between sort of eighty five and and, you know, potentially, you know Hundred thirty one hundred and forty thousand, depending on the specialty that you do.To give me an example, if you’re a registrar in surgery, you’d make a fair amount of money as a registrar in surgery. But of course, with that is a fair amount of work as well as you constantly on call and having to work extra hours. So you do. You do make money, but on a per hourly rate, it probably doesn’t work out as much.

Aussie Firebug:Yeah, definitely. Like, you know, as you said, sixty thousand, even 80 to 100. That’s that’s good money. Definitely. By any profession. I think the median income in Australia for a household is is something like seventy or eighty thousand. And that, you know, most of the time includes two people. I don’t know how they work that out, be it household to me. Yeah, two people maybe once not working, but that’s still good money anyway you look at it. But I guess when people think of doctors, they think, you know, if you know a couple of hundreds of thousands of dollars, which you eventually do get to in the end.But it’s interesting, very interesting to hear you speak about the process and how long it actually takes to build up to that. The other question I had as well, how much does a medical degree roughly cost? What is typical, hexed debt at the end of a 11, 12, 13 year degree.

Dev: Yeah. So in Australia, we’re very lucky, unlike our North American colleagues, where medical school can cost in excess of three hundred thousand dollars for six years.it’s an absolute rort in America. In Australia, we’re very lucky to have Hecs or help.Essentially, if you get the marks, you get into medical school under what’s called a merit system and hecs and help debt I think nowadays is, between sort of 7-8000 per year. I don’t know exactly how much it is nowadays, but certainly when I when I graduated, I graduated with a Hecs debt of less than 40 grand over 6 years. So and the beauty of that is you dont have to pay any of that upfront. Your your cost to study is basically your living expenses. For me, it was, you know, living in Tasmania had to pay for my water, my rent and all that sort of stuff. But I had a scholarship and a stipend from the government that helped me. Butyou dont need to foot that bill up front, which is I think is a fantastic system because otherwise people like myself would not have been able to afford to study medicine in Australia. There is another way to do it. I think there is something called a full fee paying student. Now, I think you still need to get the marks to get in. There are some universities that also full fee paying students. That’s for Australian citizens in addition to international students. And of course, if you go through that pathway, you’re you’re looking at at least sort of 30, 40 grand a year in terms of tuition costs. But most people in Australia wouldn’t be at all for that. And that is not the majority of students that go to medical school. And I think I think even in my class, the class of 2006, (if you’re listening. Hello) most of them came from average families and all of them were merit based.

Aussie Firebug: Very interested. Yeah. I sort of I just had in my head that it was like, yeah, roughly like close to $100000. I dont know why I thought that. But to hear that you graduated with such a small hecs debt, that’s I think that’s a good thing. Australia needs more doctors and if we make it like the American system or it eventually does become like the American system would make a career like medicine offputting. Like if I have children one day and they aspire to be a doctor and if it costs three hundred thousand US dollars to become a doctor I’d be like, well if you really like it, go for it. But then that’s such an off putting figure and such a hurdle that you gotta get over, especially if you don’t come from affluent family that has a lot of money to help you pay for it.

Dev: Absolutely, I mean, I always sort of view debt as not a great thing. I know there’s technically good debt and bad debt, but I always imagined debt to be trying to swim a lap of, you know, 50, meet a lap pool with an anchor basically weighing in on your feet. If you’re graduating from medical school with a debt of $300000. You can imagine why the North American health system. The American health system is so expensive because then the fees and charges and the procedures mean doctors will have to jack up their bills because they need to pay their student loans off. Medical care in America is so much more expensive than what it is in Australia. I think fortunate we are very, very fortunate in Australia to have a great public health system. And I’m spruiking it a little bit, but I’m very fortunate to get to work in a health care system that’s fairly equitable and also very fortunate to live in a country where you don’t need to be a millionaire to become a doctor. I think that’s that’s fundamentally still achievable today in Australia.

Aussie Firebug: Yeah, for sure. That’s very good points. And I’m in London at the moment and I live with the nurse who is working in the medical system here, the NHS.  Australia does have that reputation to have it of having a really good health system Even here, she said that the nurses and medical professionals do recognise it as one of the best in the world. So that gives me a bit of pride, you know, coming from Australia, knowing that we’ve got such a good health system. So, yeah, that’s a good thing. Definitely.

Dev: But I think that just your run knowledge is if there if if a UK citizen walked through an Australian hospital and certainly at the hospitals that I work at, they get free health care here, too. We have reciprocal rights. 

Aussie Firebug: I like the Commonwealth connection there. I think that’s a good thing. So why don’t we transition and Why don’t you tell us how you become interested in the world of finance and fire? And was there a light bulb moment or did you just stumble across it?

Dev: Yeah. So, look, I’ve been I’ve been frugal all my life. I wasn’t as I explained before, I wasn’t born into a wealthy family. You know, I come from come from an immigrant family, arrived here in 1990. One of the things that my parents instilled in me is in fact one of the reasons why we came to Australia was we wanted a fairer system and Australia offered that. My parents always instilled the value of hard work and also the value of not not wasting money because we didn’t have much money to waste when we came in and that sort of translated all my life in high school. When I did get into medical school, I was fortunate enough to get a scholarship and a stipend from the Australian government. I used to study for six years and I had to learn to be very careful with my money. So there was only, you know, set amount of money coming every month. And I had to be very, very careful. Now, I’m not sure whether you’ve been to Tasmania any of. When I lived in Hobart, one of the things that I found really interesting was the electricity bills were quite expensive. And I was well known to turn off my hot water system overnight so that I can save on electrcity bills, So I was a bit of a stingy bugger. That sort of carried through  medical school. I applied basic financial principles and I said I have to say 50 per cent of my scholarship and stop and money every month. That was my goal. And by the time I finished medical school after six years, already learnt the importance of saving and I had a sizeable lump saved, ready to buy a house pretty after 2007. So that sort of principle continued throughout my internship and residency, which I finished in 2008. And in 2009 I started investing outside of super and this sort of started off as a research experiment, to be honest. And then I thought about retirement and how to maintain the lifestyle in the long term. I didn’t have any formal plan back then, and I initially started off in the top 20 stocks of Australia, the ASX 20, and branched out to index investing. In 2009 I bought my first home, which is that was part of my saving because I’ve saved a lot of money for medical school. So I didn’t really know anything about fire when I was doing all this. And the irony behind by my first time was I thought I’d paid too much for it. Never in my wildest dreams did I imagine the property market to end up where it is today. And subsequently, between 2009 and 2013, when I started doing research about investing, saving debt, et cetera. Two names kept coming up. One was Jack Bogle, the founder of Vanguard, and the other one was J.L. Collins. And I started listening to another American podcast called Dave Ramsey. His American based. I’m not sure whether you’ve heard of Dave Ramsey. There have been out there that. And then then by 2013, now we’re looking at sort of, you know, how many years now? Sort of six years after I finished medical school, I’d consistently invested money outside of my super, super into the index funds. And I noticed one of two things. And again, but until then, I had no idea about fire. And I noticed one of two things. One was the investments happened behind the scenes because I’d set up an automatic system by BPay which is very similar to super contributions. And the second thing I noticed was I’d received dividends the entire time. Now, I wasn’t really aware about dividends And despite my core value of investments rising just a little bit over those years, when I took the dividends into account, this is what made the difference. And I think at about 2013, perhaps you could call it that was my light bulb moment when I said, well, hang on, I’ve just consistent invested small amounts of money. And the actual core value hadn’t really risen too much, but the dividends made it all worthwhile. That started off what started off as a hobby, really. And an experiment ended up being a light bulb moment in 2013. I think that was when I sort of went, wow, this this can actually end up in a really, really nice place some 30, 40 years down the track. And since then, I’ve just been playing money into index funds as much I possibly can.

Dev: Well, that is that’s a great story, Dev.. A lot to unpack there. First thing I want to say is I feel like there has to be some sort of connection between immigrant mentality and being good financially or having strong foundations for financial health. Because I’ve I speak on my blog about my dad, who he’s Australian, but he has Italian parents.And I and he I feel like he had that immigrant mentality. His parents were immigrants and he brought that into my childhood. And a lot of the values he taught me, I feel that those immigrant mentalities. I just actually we’re still running the annual fire survey that’s running through the month of April this year. But I feel like I should have added it added in a question about some sort of. Are you from an immigrant family or were your grandparents from Australia? Because I feel like this, that there has to be some sort of connection there between the bulk of people in fire with sort of that save money, tuck it away for a rainy day mentality and having some sort of heritage from from an immigrant family, which is it’s funny that you mentioned that, but it’s so true, I feel. Secondly, so I’ve mentioned earlier in this podcast. Well, I’ve had a few friends that went on to be doctors and from my limited experience, there seems to be a driver for someone to want to be a doctor, whether that be wanting to help people after losing a loved one, the status symbol or another reason after all that schooling. The idea of retiring early might might seem crazy. So I have to ask you, what are your plans in the context of retire early and how’s that going to work? And why did you even start to think about having a comfortable retirement? Because, as I said, most people that that I know of and there’s only a few going to medicine with the idea of sort of helping people for the rest of their life and sort of never retiring per say.

Dev: Yeah, great question. And just to win back a little bit about your sort of immigrant mentality point, I think I think you’re spot on in the sense that, you know, I come from India and there is no social safety net there. You have to, you know, work hard and you have to save money. You have to invest for yourself and your family. I think people that immigrate out of countries in the subcontinent, Asia and some of the poorer countries are probably a bit more careful with their money because they’re understand that they’re coming from a country where there is no social safety net. So and that’s probably that’s probably the biggest factor when you come to Australia. Yes, there is a social safety net, but often it’s considered not in good light to be under the social safety net program, particularly in Indian culture. So there’s always this sort of drive to have a job. I mean, the first thing people ask you in India is what do you do for a living? And if you said, I’m not doing anything, then that’s that’s not a great look.So that’s probably where that sort of immigrant mentality comes from.

Aussie Firebug: There’s so much poverty. If people who haven’t travelled outside of Australia or if only, you know, go to New Zealand or I guess rich first world countries like it’s crazy how much poverty there is in the world and how lucky we are to live in Australia.Unless you see it, I guess you can’t you don’t realise how how hard some people are willing to work. And it doesn’t matter that they’re earning fifteen, you know, $10 an hour, whatever it is, they are just really happy that they’re in a job in the first place because where they’ve come from, any sort of life that they’re living in Australia, you seem to be, you know, like they’re they’re a paradise, which is just crazy to think about.

Dev: Absolutely. I think, you know, we are very, very lucky and very fortunate to live in Australia. Just to highlight your other point about, okay, well, you’ve done all this training for medicine and you become a doctor and become a consultant. Then why would you want to retire? I think for me personally, I don’t think I will retire. Really? So the RE component of fire is probably not going to be applicable. What I would want to do personally is to achieve financial independence early so that I have the option of reducing my hours. So I’ll still be a practising doctor.But I would like to, you know, not work full time, perhaps maybe just work sort of two or three days a week as I become older. So that’s really my plan. if you’re doing medicine to retire after 10 years, then then it’s probably not going to be worth it. Going through 14 years of training to work just for and then retire.Although some doctors this thing saying I’d love to retire tomorrow, but in reality, I think I will just be too bored.

Aussie Firebug: How many hours does or how many hours do you work?Because that’s one that’s another sort of stereotype that I always hear that doctors were crazy hours, 70, 80 hours a week. How many hours do you usually work a week?

Dev: Yes,so I’ve just recently reduced my hours actually prior to that. It would not be unusual for me to work 70, 80 hours a week, not would be unusual.

Aussie Firebug: Goodness gracious. Yeah. I can understand you wanting to reduce that. 

Dev: Yeah. So it’s not unusual. And look, to be honest. That’s that’s that’s not the most that I’ve ever worked in my life.And when I was doing surgery, it would not be unusual to work longer hours.I mean, you could resident medical officers or house surgeons for a reason because you kind of have to live and work in the hospital. SO the hours are quite grueling depending on the specialty.Now that I’m achieved coniltancy so I’ve got the option of reducing my hours, which I’ve done actually just before Covid struck. I actually reduced my hours. I usually finish up at about 9:00 p.m. at night, but I finished early. So I have that option to try and reduce my hours. And that would be my plan moving forward in terms of, you know, quote unquote, retiring early.And one of the things that I want to really want to be involved in more and more in the future is teaching.I’ve always been involved in medical education, even in medical school. I’m currently employed as a lecturer at a university. I love medical education. I’m well-known to just randomly start doodling on pieces of paper to nurse and medical students. So that’s something I really want to do more and more of that and reduced my clinical time, of course, depending on where this financial thing takes me I really want to provide principles and knowledge to younger doctors that are graduating medical school and younger doctors, interns and residents very early on in their career to make sure that they don’t get trapped and they don’t fall for these traps in terms of financial products and and try and instill some basic principles for those young junior doctors to make sure that they get their finances in order. I want to explain to them that it’s not particularly complicated. A lot of doctors think finances are very complicated. We put so much effort into our careers, but you don’t really need to put that much effort into learning about finances. So that’s where I want to see myself in the next sort of 10 or 15 years in the future.

Aussie Firebug: Awesome. Awesome. Yeah. I feel like you can pass exams to be a doctor. You can learn about index funds. Its Really not that hard. It’s probably a hell of a lot easier than what it takes to become a doctor. You speaking about those crazy hours and it sort of makes sense to me now why a lot of doctors aren’t necessarily great at finance. Because if you are working those sort of hours and you’re living in the hospital or wherever you’re practicing, then yeah if you get out or you have a weekend free or whatever it is, then you do like you’re earning all this money. Eventually you do want to sort of make the most of it. It reminds me of my mates that flew out west and did the FIFO work and were making all this money. Some of them would know just finish their trades. They’re making over 200 grand a year. It’s crazy sort of money. But they were working on an oil rig or on a mine site for four weeks and they were coming back home for one week and sometimes you would take a day to fly home on a day to fly out. So they’re only there, only at home for like five days. So in that five days, they got all this money.They’re being pent up. They’ve got to have fun. They’ve got to do absolutely everything. So in the span of five days, you know, they’ll go out to the pub four out of five days,shout everyone drinks. They’ll buy a new set of golf clubs because they go on golf and on the weekend and they’ll never use them ever again. Like they just blown all this money. Not saying doctors do the same thing, but I think it’s like a similar situation where you’re just burning all these hours at your job and you’re earning all this money. Then when you do get your leisure time, you probably know you’re probably not going to go for the, you know, conservative option. You’re probably going to do something really grand and maybe buy a new car or do something crazy like that because you feel like you’ve earned it. I don’t know about if that’s how you look at it, but that’s sort of reminds me of my mates that earned all that money in th FIFO work.

Dev: Absolutely, I mean, there’s always that risk of, you know, rewarding yourself. I deseserve a Mercedes or I deserve a luxury home and I deserve a huge mortgage that I probably shouldn’t or couldn’t afford. And I think you’re spot on. I think the other thing is a lot of doctors, if they don’t, you know, if if they work sort of long hours last week, the last thing you want to do after a 24 hour call is to come home and learn about finances So I think one of the one of the things that I’m really trying to target is I’m targeting those interns and residents who don’t, you know, who probably work, you know, 40 to 60 hours a week, you know, before they become registrars and consultants and they’re working crazy hours. Really targeting them to sort of explain to them that you need to set up your finances in such a way that it’s uncomplicated and make sure that it just automatically happens in the background because you will get busy and you also get to do things  and that’s where mistakes can happen. I think that’s one of the things that I learned in medical school, is that if I had a system in place, if I can set it up in such a way that I don’t have to think about it and it just happens automatically, then hopefully one day, 40 years later, when I’m about to retire fully to open up my portfolio and say, wow, you know, it’s a bit of a snowball that’s that’s become quite large in that time. And I think that’s that’s really critical.

Aussie Firebug: I couldn’t agree with you any more. And that’s that’s such a great point. You bring up because I think about my situation, I started Aussie firebug the website and learning about finance everything when I was working in local government and it’s a bit of a cliché, but it sort of is true. I had a lot of spare time at the job so my mind would wander and I did have time to like research stuff and I clocked out of work at. So I started work back then at like seven. I was an early starter because it was flexi time and I had the clock out at four and then I’d go straight to the gym after work and I’d had dinner and I’d sort of have like close to four and a half hours free every single night to do whatever I wanted, which is really like not not many people have that, especially as you progressed through your career and everything and the kids come on the scene, you sort of your time is sucked up everywhere. So I had all these spare time. And you do you learn when you have spare time, like it was really hard, like you said when you got that meant mental fatigue after working 50, 60, 70, 80 hours a week from work you’re not going to be in the state to absorb anything or want to learn anything new. And I’m dealing with that right now, working in the private industry in London. It’s so. Go, go, go. Busy, busy, busy. And I’m enjoying it. It’s fun. It’s a different it’s a different change of pace.But I don’t have hardly any time to do my AFB stuff. Like we’re recording now. But I think about how long it took me to get the website up to like to make the content at the very start to get all the processes in place at the very start. Took hours every night. I was working on it and I was learning about index investing. Everything like that just took so long because I was in a position to be able to do it. So when my life did get really busy like it has been for the last 18 months or so, I already had stuff in in place and already had processes of how to record a podcast like we’re doing now, how to edit all all that sort of stuff was already in my head. I’d already learnt it. So it wasn’t as hard to do, but I’d already built up the knowledge beforehand. So I think that’s a really key point that you mentioned there. It’s less easy to absorb this information if your if your brain is too busy in your career doing 80 hours a week, it’s just crazy to expect people to learn new concepts. So yeah, I think absolutely a good.

Dev: common themes that I find with with doctors is that, you know, like like all things like all other professions, actually, to be honest, is that they put it off. And of course, you’re an intern. You’re really keen to learn medicine. See, putting it off. You’re a resident. You really came to get into a training program. So you’re putting finances on. You’re a registrar now. You accountable for your training. So you’re putting that off because of exams. Then you become a consultant. Then you got to start your public and private practice and you’re putting that off as well, see, putting finances up. And eventually you find that you’ve done you know, you’ve done so much training in medicine, you put the financial side of it. Often, often, often often off. And guess what? You know, what is the most important thing in finances is the power of compounding. The irony is you end up making a lot of money when you’re a consultant. You know, some consultants make 506 out of seventeen thousand dollars. But if you haven’t started investing and haven’t set up the processes early in your career, it’s gonna be very difficult to catch up. You know, it’s not impossible because you’ve got a huge amount of income, but it’s gonna be that much harder. And of course, now you’re ten years older as well. So your ability to absorb information outside of medicine is a lot less.

Aussie Firebug: Yeah, it’s great point. And it goes through all facets of life, like building good health habits at an early age will serve you well throughout the rest of your life. good financial habits of building good relation habits is so important at a young age or at the start of your relationship or whatever, wherever, whatever area it’s in is good to start. Start young.But you almost get trapped. It’s like a it is sort of the rat race, isn’t it? If you go into the career and then you block out everything, you might come out of the career 30, 40 years later, having neglected what’s really important in life but you’re making a whole bunch of money. It might almost be too late, which is yeah, it’s like the whole hamster wheel thing, isn’t it?

Dev: Absolutely.

Aussie Firebug: Okay. Let’s, um, let’s talk about what you actually invest in. And being a doctor, I’m interested. Do you actually invest in a trust or do. Do you do it in your own name?

Dev: Look, I just do it all in my own name only because I’m a public health employee. I think if you have a private practice, a business ownership or a sole trader, it may be beneficial to create family trust so you can put our assets within those trusts.And that’s that’s basically taxed, effective, but also protects those assets. But I’ve I’ve left my private practice some years ago. I just didn’t enjoy it. I’ve actually found it quite stressful, to be honest. And I’m now entirely in the public system. So I just get paid a wage and I just invest in index funds.I’ve just kept it as simple as possible. In addition to my super

Aussie Firebug: And is it just the standard like Vanguard index funds? You do like some beta shares?

Dev: No, I just use Vanguard ASX 300 Index Fund. I don’t. I don’t do ETF use because I invest sometimes multiple times a week through Bpay. If you if you log into my net bank, all you see is recurrent BP payments into the Vanguard Fund.And if I have extra money, then I invest that as well. But basically, the the the the investments that I do is if I get paid at, say, on Tuesday, I know how much I’m gonna get paid.I’m sort of, you know, lucky because, you know, being a public health employee, you kind of know exactly how many hours you’re doing and you get paid a wage, 20 percent of that after tax income. Just go straight into the straight into the Vanguard Fund. So, you know, if you log into my Netbank, all you see is that 20 percent goes straight in every single week. And I also invest a little bit extra every fortnight because I have a couple of jobs. So the other job that pays me pays me the alternate fortnights. So and that’s basically what I’ve been doing for many, many years. I’ve I’ve sort of stopped, you know, my separately managed accounts and ASX 20, I’d just get the vanguard ASX 300. I subscribe to the wholesale fund and money just goes in.

Aussie Firebug: Yeah, great. That’s timeless, timeless wisdom. Just automating those investments. I do wish that it’s such a powerful feature that automatic BPAY. The only thing is, well, it depends on how much you’re investing, but usually for most people, the ETF option has a slightly lower management fee. But I do wonder like my mind has sort of shifted over the years between lowest management fee is the way to go 100 percent. Nothing else matters. But I’ve come to realize that if something helps you build a good financial habit like doing that automatic BPAY option and setting up that automation, that is probably worth a lot more to you mentally and probably financially in the long run, because you might have not even bothered to set up the ETF option. So I do wish the vanguard lower lowered its fees on the the fund through investing directly through them to be more in line with the ETF option. And I think there’s a whole bunch of reasons why they don’t do that. But still, it is such a good feature that I wish I could do even through the ETF. Just set up that automatic payment where I didn’t have to log into my broker account and actually make that trade.

Dev: So yeah, I’ve found Vanguard. Very easy to use. They don’t have a very sophisticated online sort of system to be on. And I still think that just launched these personal investing platform. It’s called the Personal Investor Service, where they are suggesting Vanguard ETF support through that services brokerage free. I haven’t really looked into it in detail, but so I think I think they’re trying to reduce the fees and I think they’re trying to get rid of retail index funds as well. So basically offering old customers wholesale management fee rates. So I think my my management fees 0.16 percent, which which is slightly higher than ETF, but I don’t think there’s any brokerage. But yeah, you’re right. I mean, you know, if I get paid on a Tuesday by Tuesday at midnight, 20 percent is gone. So I can’t spend money that I don’t have.

Aussie Firebug: Yeah, powerful stuff, powerful stuff. Yes, I did. I did see that product, by the way, the Vanguard brokerage product, which is a bit weird because it is free if there’s no brokerage costs, but there’s a there’s a subscription or like management fee associated with it, which I think is like 20 basis points, which is really it’s a bit of a hidden fee. 

Dev: I think the fees cap out at 600 bucks or something. So if you’ve got a portfolio greater than 300000, everything after that, it’s technically free is my basic understanding, but I need to look into it in a bit more indem.

Aussie Firebug: If the previous 10 years or so has taught us anything, the fees are just coming down and I’ve been hearing about zero management fees on a few funds for a few years now.So it is good that more competition is good for us investors at the end of the day. And it’s just crazy how low the fees are compared to some of these managed funds that are not index trackers. So, you know, we can’t complain too much. 

Dev: I say to doctors in general are just people that listen to my podcast. I say keep your keep your fees in total less than 1 percent now. In the scheme of things, to me, one per cent sounds like a huge, huge fee. Yes, but there are some and it’s fees, as you suggest, is, you know, 1 to 3 percent even.Some of the some of the people that contact me my jaw drops when I say, you know, 3 percent management fee. I mean, are you telling me that you’re getting 30 times the return is what I’m getting, you know, for those fees? The irony is that probably getting less.

Aussie Firebug: Yeah, I know. It’s absolutely crazy. Although the education about index investing and how much fees do cut into your total return is so much better now. The amount of exposure that has gotten over the last couple years and I think a fair bit thanks to the FIRE movement like I know a lot of people have yet written to me as well, and they’ve looked at their investments with a few managed funds and they like this, you know, 2.5 percent. That’s that’s a bit high. Yeah, that’s that’s like ridiculously high. You know, unless they’re giving you that extra return, which, by the way, it’s sort of impossible to know which funds are going to outperform in the future. Past performance is not a indicator of future performance. So yeah, it’s nuts how how much they’ve been running it. But I feel like the index investing is growing at a crazy rate. So it just means that those managed funds, if they’re going to be going to be still charging those exorbitant fees, you know, they’re going to have to back up with results. And I think in the grand scheme of things, with the rise of index investing, it should weed out those managed funds that are performing well and in the future will only get some of the cream of the crop of the managed funds. So if you want to go down that route, which you know, I don’t, but if people do, it should be a better product in the end. Now you run the dev ragged podcast over at Dev Ragga dot com. How long have you been creating content and what can someone expect when they have a listen?

Dev: Yeah. So I first started podcasting way back in July 2018. So it’s about sort of almost two years now.And currently it’s available via the website, but also various podcasting apps and also have a Facebook page associated with it where I’ll post articles and thoughts of interest and people can contact me or comment on it.Facebook seems to be the primary medium in which questions come through. Matt, not my intention was never to podcast with the general public. My intention was actually to leave a blueprint for my children. So I needed a way for them to learn about finances so that, you know, one day, you know, touchwood, I’m still here in 10, 20 years time, But if I’m not, they can listen to dad. You know and in a strange way, talking to them by podcast medium. And I started to put together 10 episodes and I did it via voice and did it via podcasting because I’m a terrible writer. I mean, I could have started a blog, but my my writing skills are much to be designed for. And subsequently, I put together a 10 episode series covering the basics of personal finance as everything from, you know, the power of compounding to pay your self-concept to who are listened to. Wills to personal insurance, to investing, to debt repaid, debt reduction, etc.. And basically, I came up with five relatively simple concepts that I wanted to instill into my children, and that’s one of the reasons why I started podcasting. And, you know, if if if I can have a couple of minutes, I’ll just go through that and I talk. Repeatedly in each episode. And that is I wanted my children to take a set amount of money and pay it to themselves, and that set amount of money is 20 percent of after tax income. I wanted them to invest it. I wanted them to always reinvest dividends and I wanted them to do it for the long term. For me, long term is at least 20, 30 or 40 years plus. And finally, my favorite ways to automate it. Which is the five core principles that I’ve used in my life over the last 10 years of investing. And the aim was to provide these concepts to my kids, the boom times over recessions, etc., which they can implement in their own lives. Then I floated it to some family and friends, medic’s and non-Medics, and I said, Well, don’t you have a listen to this? See what you think, you know, because I’ve never podcast it before. I don’t know anything about podcasting. I’m very bad at technology. So then they listened to it and they suggested that they know I should keep going because they actually found it relatively useful in their lives. So that’s how it all got started. Then a few of my medical colleagues jumped on board because they found it quite interesting. Then I contacted one of the administrators of a very large medical Facebook group, predominately targeting doctors, and they were keen for me to publish them on their Facebook group.So if the administrator of that group is listening and all the members. Thank you very much for allowing me to publish it on that Facebook group. And it kind of spread from there. And now I’ve got a few thousand downloads per episode, which is quite satisfying and and content wise is very much directed at personal finance, debt saving and investing and more focusing on the concepts of these topics rather than individual personalized advice which I can’t do over the podcast. So what started off as a way for me to provide a blueprint for my two very young children who are very young, One of them is in primary school, the other one’s in kindie, turned out into a more of a serious sort of podcasting episode by episode release online. And and for the people that do listen to my episodes, it’s very much me talking. I don’t have any guests. You don’t need to be a doctor or a health care worker to listen to it. It’s designed for anyone. In fact, it’s actually designed I think for kids above sort of 13, 14 years of age. Some of my business families and kids listen to it. And basically it’s me discussing about financial concepts and trying to relate it to the individual personal finance situation. And that’s the story. So it all sort of started off as a blueprint for my kids and now it’s sort of slowly growing.

Aussie Firebug: But what a great concept. If I will put a link to the podcast in the show notes for anyone out there that wants to have a listen, highly recommend. I couldn’t let it go, Dave. You are a doctor, so I couldn’t let you go without some sort of question about the pandemic that is gripping the world at the moment.. The Corona virus, what is because you hear so much information from this media outlet, from this article, from this president. And, you know, probably we shouldn’t be injecting bleach, but that’s that’s a whole nother topic.But it’s hard to know what is actually happening on the ground. So from your opinion, you’re a doctor. You’re in the hospitals. I’m assuming that you’re seeing Corona in your work.What is going on in Australia? Is it getting better? Do you have any predictions or when do you think these restrictions should lift in your professional opinion? And when do you think maybe they will lift in a political sense?

Dev: Yeah, good question. So, look, I’ve actually learnt a lot about public health policy during this pandemic and and how important public health policy is. You know, people people say, you know, doctors and nurses, we save lives, et cetera. You know, we’re as health care workers are heroes of the world. But strangely enough, the real heroes, I feel are you know, I know it’s gonna sound a bit politically incorrect, but the politicians and the young chief medical officers and the public policy makers who make policies for us to abide by and and what was interesting about this pandemic, which we all thought in Australia was never going to come, let’s face it. I mean, January 1st, 2020, I woke up. I didn’t think a virus in China was going to impact the entire globe, let alone Australia. And what’s interesting is, you know, the concept of social distancing, you know, the concept of staying that 1.5 metres apart and the concept of not leaving the house unless it’s essential duty such as going to work or, you know, grocery shopping. And following those rules, how important. It is because had we not instituted those measures as a country, had we not instituted those measures, measures as an individual and as a family and as Australians, then we would potentially be in a very, very difficult scenario today. So I always think about it this way, right? I mean, the Grand Prix. I remember. I think it’s mid-March was the Grand Prix in Victoria. I remember I was worried that the Grand Prix was going to go ahead and Victoria very and very close.And if I’m not mistaken, just prior to that, eighty thousand people got together at the MCG for the Women’s Twenty20 World Cup. If I’m not mistaken. So, you know, that literally was, you know, six weeks ago. six weeks down the track nowhere in my slightest imagination did I ever think that we would be in such a great position as a country in terms of trying to defeat this pandemic. I guess one of the concerns that I have is now that we’ve done so well, we can get quite lax. So, you know, we just need to  slowly let you know the foot off the accelerator and slowly ease into these restrictions being eased because, you know, it’s it’s not it’s not a situation where we can just flick the light switch on and every everyone goes back to normal. I just don’t think we will achieve normal for some months yet. And I guess What’s the way out of this? I mean, I’m no public policy expert, but the first thing we probably need to do is keep our international borders shut because most of this virus and most of the patients that I’ve called up for positive results and most of the patients are in Australian hospitals and most of the transmission is coming from overseas visitors or some sort of contact with overseas visitors. So I think that’s got to be kept for a while. Of course, it won’t affect you because, you know, if you’re in australian citizen, you can still come back to Australia. It’s more the tourists and the visitors. And the second thing is got to be a little bit calm. It’s all about what are we going to do for non-essential businesses? I mean, Matt, this is taking a huge economic hit around the world, especially in Australia. People are suffering. Many patients have lost their jobs. It’s very distressing for them. And it’s it’s an incredibly difficult time for Australians. But I think we’re on the right track. I think I was a bit nervous when the Grand Prix was going to go ahead. And but I have a lot more faith now in the government of a lot more faith in our chief medical officers and the public policy experts. And I’ve a lot more faith in Australians because I think we’ve we’ve all banded together. We’ve all supported each other. We just gotta go a little bit more, perhaps another couple of weeks. I think in Victoria, they’re going to try and ease restrictions in mid-May, if I’m not mistaken, and go from there. Just please don’t inject yourself with disinfectant. I think what I have several colleagues in the United States, some of them in the west west of us in California, some of them in the east in New York City. And I’ve got relatives in other states that I’m very concerned about in Texas and other states and you know, the Texas governor has recently said He really keen on opening the state. I’m actually very fortunate we’re very fortunate to live in Australia where, you know, politicians actually listen to medical experts and public health policy experts rather than say random stuff. So I think we’re very fortunate here and Australians are looking on in horror what’s happening in the United States where things are very difficult.

Aussie Firebug: Yeah, it’s very it’s such a polarizing topic like one because the whole world is shut down. But it’s it’s almost the social experiment of a lifetime in, you know, for better or for worse. The United States, like I think there’s a picture of a beach that opened up in Florida or something that everyone was just at the beach and, you know, just going about their business. And even actually the one country that I don’t feel enough people are talking about is Sweden. Sweden is actually using the herd mentality approach as opposed to the social distancing approach as well. So it’s going to be, you know, give it another 18, 24 months, which, you know, if you’re a policymaker, you’re not going to risk killing more people than necessary or not necessary, but killing more people than what who otherwise could have been saved by experimenting like this. But it’s going to be super interesting to see what happens between the two different approaches. I know everyone is saying the social distancing one is working the best bit. I’ve been reading a bit about Sweden and how they’re having success over there. I don’t know what America is doing, but it’s it’s definitely interesting to to see the fallout of all this.

Dev: Yes. So that has got me thinking as well in terms of, you know, the surge hasn’t really happened in Australia. But is it going to happen three months, six months down the line when restrictions are basically eased? It’ll be interesting to see. And I would hope that the government and, you know, based on their policies, have some sort of game plan on how to do it. And I guess because one advantage of that is we’re far more prepared now and even every single hospital is far more prepared now than we were just two, three weeks ago and I think weeks ago had been hit by a surge of covid 19 cases in Australia I can categorically say that, you know, apart from what some of the bigger hospitals, I think a lot of the mid-sized to smaller hospitals would have been absolutely stuffed. And so at least if a surge does come in three, six months time, we’d be more prepared. We know a lot more about the virus now than we did six weeks ago. And you’re right. I think I am a little bit nervous. I’m sort of expecting if things go haywire, it’s probably gonna go haywire in about sort of six to twelve weeks time. But but personally, in terms of my knowledge about the virus, the way I’d be managing sick patients, the way that I’d be resuscitating them if needed, The way that I’d be transferring them out because of a work in a very small sort of public health hospital, a few hospitals that I work at. You know, we’re far more prepared now than what we were, you know, just, you know, four to six weeks ago when all of this started happening.

Aussie Firebug: Well, that’s that’s excellent to hear Dev now wrapping things up. Last question for you, Do you have any advice out there to other Aussies who are in the medical industry who are on the road to financial independence?

Dev: Yeah. So, look,my advice, the number one thing is, you know, I’m a firm believer in keeping things structured and as simple as possible. I found that the more complex an investment is, the likelihood of it returning better than average returns is lower. And I think it’s probably something difficult to get your head around, because a lot of people think, oh, you know, the more complex things are, the better it is. Right. Because when you think about it, you know, when you go buy a car, the more expensive car that you buy, the better product you get, but in finances that may not be true. In fact, that might be inversely true. So that’s one thing. And generally, I believe in the Australian economy. I believe in humanity in general, even though we’re in a bit of a pandemic. But I think humans will aim to do better for themselves in the long term. So I guess, you know, in terms of basic principles, here they are, right. So you don’t need a huge amount of money to get started in investing. And please don’t keep huge amounts of cash if you want to lose money that’s the best way to lose money to hoard money under your bed or in the bank account because cashes of depreciating over time due to inflation, the value of money just erodes.And as a general rule, stay away from consumer debt and ideally debt in general.But I understand you manage to borrow money to invest or buy a home and make sure you always borrow less than what you can afford. I think that’s one of the timeless principles that Peter Thornhill talks about not the maximum amount of money that you can afford. Always pay yourself first. I use the 20 per cent rule if you can’t afford 20 per cent and start with 5 per cent, start with 10 percent. It doesn’t matter. But start early. Don’t wait until you graduate out of uni or don’t wait until you become a intern or Don’t wait until you become a consultant. Because, you know, even if you have a part time job during medical school or a university, take that money and start investing with that income because the power of compounding is absolutely epic. And now try to understand finance, make an attempt. Who knows? Might actually enjoy it. And lastly, share ideas and keep an open mind and try and find Like-Minded People. I mean, it was a great feeling, Matt, to find your podcast. I think you’ve got a bit of a fan base, by the way. You probably don’t know, but you’ve got a fan base amongst the medical community. I mean, your pod cast channel is widely circulated in in doctors Facebook groups around Australia. So because in Australia. And correct me if I’m wrong, talking about money is a bit of a taboo. What do you think? We don’t openly.

Aussie Firebug: Yeah. Now that’s it’s one of the biggest. It’s why everyone talked about how much they were paying for their bills, how much their home loan was, and everything that we spend money on. We’d all save a bunch of money I could was all open out on the table and we discussed it. Everyone would be richer for it.

Dev: Absolutely. I think I’ve always found that a bit strange compared to other countries, particularly in North America and even in India. People are far more open to talking, talking about money and sharing ideas, talking about it and learning, because at the end of the day, we’re here to learn. And, you know, I’m really happy that I found your podcast because, you know, strangely enough, you are one of the first podcasts that I started listening to when I was, you know, looking up this concept of fire because I was kind of doing it, but I kind of didn’t really know what I was doing until I was able to consolidate what I was doing. So I think what you’re doing is fantastic for the fire community. What you’re doing to the medical community is fantastic. You’ve got a favorite of listeners there. Keep things as simple as possible. I think the more complex things get, it may not be, the higher the returns. The complexity may not actually be the best thing for you. May actually cost a lot of money to have complex investments.

Aussie Firebug: Wise words there Dev. Thank you so much for the kind words as well. It’s nice to hear that I do have some fancy out there in the medical industry. So that is that is nice. If anyone wants to get in contact with you, did they be listening? They may do it maybe in the medical industry themselves. What is the best place to contact you?

 

Dev: Yes. So DevRaga.Com or if you Google me and just type in personal finance, I’m all over Google and there’s Facebook page associated with that and contact me via Facebook as well. Most of my followers contact me either via the podcast itself, which is cast box or the Web site or most of them actually contact me via Facebook 

 

Aussie Firebug: It’s been an absolute pleasure chatting to you. Thank you so much for coming on the show.

 

Dev: It’s an absolute honor. And thank you for having me, Matt. And stay safe and really looking forward to catch up with you when you get back to Melbourne.

 

Aussie Firebug: Yeah, that that’s if I make it back or if they open up the borders for me, hopefully I get back. Hopefully it’s or will not blown over, but hopefully a bit more relaxed come January next year. It’ll be lovely to meet you, mate. And yeah. Looking forward to it. Fingers crossed. Thanks, Matt.

DEC20 Net Worth $859,482 (+$30,096)

DEC20 Net Worth $859,482 (+$30,096)

And so we have reached the final NW update of 2020.

WHAT. A. YEAR.

I finished my contract in early December before Mrs. FB and I jetted off to Sweden for Christmas and some sightseeing.

I’ll be honest…  the last couple of months in London were a real struggle for me. The second lockdown plus our housemate testing positive for Covid in November (which resulted in us being locked inside for two weeks) really got me down. It felt like a weight was lifted off my shoulders when I finished up work and secured my bonus. We’re going to miss this amazing city and all the friends we have made here a lot, but because of Covid/lockdown, the goodbye was a lot easier and we were keen to get out of the UK if I’m being truthful.

With that being said, I made it into the office during our last week to see that killer view one last time… and I actually managed to get Mrs. FB a guest pass too. She got to see this beautiful sunset with me on my last day which was very special.

Going to miss this view 😢

After saying our goodbyes and packing up our London life it was off to Stockholm to squeeze in one last trip before returning to the motherland.

We originally wanted to do a Scandinavian tour that also included Iceland and Norway to end the year but given the current environment, I’m just thankful we at least got to see Sweden. I was super interested to see how the Swedes were handling Covid because they were one of only a few countries that didn’t implement strict lockdown measures. It was a bit weird to be walking in and out of shops without putting on a mask in Stockholm and tbh, you wouldn’t really know that there was a global pandemic if it wasn’t for the signs.

The Swedes have a bit of social distancing already built into their culture (they rarely stand close to each other in general) which was a common explanation I received from asking the locals what they thought about their country’s response to the situation. That and their government seems to trust the citizens to do the right thing and for vulnerable people to isolate.

We then made our way up north to a town called Abisko to see the northern lights. And when I say up north, I really mean up north.

Abisko, Sweden

I was staring at the map when we got to Abisko and I’m pretty sure it’s the furthest away from home I’ve ever been (in terms of distance). We went there with the sole purpose of seeing the aurora borealis dance across the sky which has been a bucket list item for many years.

If you’ve ever been this far up north, you’ll know that it starts to get dark around 2:30 PM 👎 which feels so unnatural. I honestly don’t know how people live up there. I can handle 6 hours of light for a few days but I could never do a full season.

Anyway, the first night was -4°C and full of clouds. We couldn’t see any stars which is a bad sign. We lasted around 2.5 hours on the lake (you have to head down to the lake to reduce the light pollution from the town) before we called it quits at around 10:30 PM freezing our asses off!

We booked a photo tour on the second night because we had read that they will drive you to the best spots and you need a good camera to capture the lights properly. The tour wasn’t cheap at around $170 AUD a head 💸 but we thought “What the hell, when are we ever going to be here again”. Off we went into a chilli -7°C night chasing the aurora in the minivan. We pulled up to a few different spots but the issue remained… more… god… damn… clouds. Try as we might, the heavens just wouldn’t play ball and we ended up finishing the tour seeing diddly-squat. The tour guide did give us some good pointers and basically said that to see the lights, you just need to be patient. Abisko is one of the best places to see the aurora because it’s situated between a mountain and a lake which means the clouds have a tendency to clear up to reveal the magic of the lights that sit behind them. I headed back out to the lake after we got back from the tour just in case the clouds cleared up but I could only last until about 1 AM before calling it quits.

Google weather was predicting that our third and final night was going to be clear up around 11 PM and I was absolutely HELL BENT on seeing this goddam spectacle. And just my luck, this night was also the coldest of the three with weather dropping down to -10°C plus wind 🥶. I bought some firewood from the shop and put on 100 layers of clothes and headed out to the lake at around 8 PM to start a fire in the pit.

The annoying thing is the town has a ‘webcam’ live feed pointed at the sky which you can look at from your phone/laptop in the cabins. It’s theoretically meant to show you when the lights are visible so you don’t have to sit down by the lake in the cold all night. But the issue with that feed is that the camera picks up lights that you can’t see with the human eye. I was down on the lake for a few hours before a lot of people from the town came down because the live feed was showing green streaks in the sky. But if you looked up, you couldn’t see anything 😕… it was at this point that I started to wonder if the aurora was just made up by the tourism industry 😅.

Mrs. FB tapped out around 11 PM and I pushed on into the night waiting, hoping, praying that I would see a glimmer of green. I kept updating Google weather waiting for the sky to clear up but frustratingly, every time I did, the predictions were continually pushed back 30 minutes and before you knew it, 4 AM was upon us and I had to wave the white flag.

We left Abikso sad and exhausted after not being able to see what we went there for. But in a weird way, I guess that’s what makes the northern light so special. You aren’t guaranteed to see them and you’re very lucky if you do. I’ll try again one day but after failing this time around I definitely have some pointers for anyone out that wants to see them.

  • Don’t plan your trip with the sole purpose of seeing the lights
  • I’d personally go to the Norway city of Tromsø next time. Abikso is meant to be one of the best places to see the lights in the world but there’s literally nothing else there. At least you have a lot of other activities to do in a city
  • The odds of seeing the lights as epic as they are advertised on tourism ads are extremely unlikely. Our guide said they only really come out like that and dance across the sky a few times a season. You can get some good photos with a proper camera but the naked eye experience can be a letdown
  • Try to stay for at least a week to ensure you have multiple chances of seeing them
  • Don’t trust any website/app. The accuracy of forecasting the lights is incredibly low.

We then caught the overnight train to a snow mountain called Åre. It had to be one of, if not the most scenic mountains I’ve ever been to because of the unique sunrise/set that lasts for hours whilst you’re snowboarding. It also has an incredibly pretty little snow village that looks like something out of a movie.

Åre, Sweden

The cutest little Christmas snow village

Frozen Lake with Mrs. FB

One of the most impressive things about this mountain was the fact that it had a train station in the middle of town.

The Polar Express

I’ve never seen that before. It must have a really gradual incline up the mountain for a train to work right? Whatever black magic the Swedes were casting, I was very grateful it was there because it made travel super easy for both up and off the mountain. We caught a sleeper train off the mountain to our friends home town of Ängelholm to spend Christmas with her and her family.

We almost had a meltdown in Åre when we read on the news that Singapore had stopped transit flights from the UK after a new strain of Covid was discovered 😩. Our ticket home departed from London on the 2nd of January and included a stopover in Singapore before flying to Adelaide… It was so hard to figure out what our options were and if we were actually allowed to fly home. Because things were moving so fast, Singapore Airlines couldn’t really give a definitive answer on anything. What a nightmare. After a really intense 4 hours of phone calls and panic Googling, we decided to switch our first leg to leave from Copenhagen instead of London. Thank God Singapore Airlines had an available flight from Copenhagen that they let us switch to free of charge.

Christmas was very fun and NYE was a bit boring which was fine, our focus was well and truly on getting home at that stage.

On the 2nd of January, after two years of being away, we finally boarded the plane that began our journey home.

Arriving in Singapore was an experience I’ll never forget. We got out of the plane to 6 people in full on hazmat suits lol. I’d heard about how serious Singapore was taking Covid but it was still pretty surreal to go through it.

You know those movies where the army sets up a makeshift camp with quarantined off areas and there will be a bunch of people trying to get through all different stages of security… yeah it was like that. The only thing that was missing was a dude with a huge hose blasting naked people down before they’re allowed to enter 😂. I’ve got some videos of the whole ordeal that I’ll be showing my kids one day I’m sure. Crazy times!

We finally got to Adelaide and were ushered away to The Playford hotel in Adelaide where I sit typing up this post in quarantine. We have been really lucky with our hotel which includes an upstairs loft, big 50 inch TV and spa 🤩. We’re apart of the ‘Aussies in Quarantine’ Facebook group and some of the stories we have been reading have been horrific

And with that, our overseas adventure has come to an end. We’re now onto the next chapter in our lives and even though we’re stuck in this hotel for another 10 days, damn it feels good to be back home 🐨🦘♥.

Net Worth Update

The NW had solid contributions from our share portfolio and Super this month. But the big bump came from my bonus I received which was £20K.

We started the year at $770K and finish at ~$860K. A $90K increase in net worth is the lowest yearly jump for us since 2014-2015 but considering we had one of the worst stock market crashes in history, I’m very happy with those results.

I thought we might be on track to crack a mil in 2021 but this is looking less likely now unless there are some big gains coming up. I used to dream about becoming a millionaire before 30 when I was a kid and you know what, I came pretty damn close. Mrs. FB is keeping that dream alive though as she won’t hit the big 3. 0. until late December this year.

There are two big factors that will have major impacts on the net worth for us in 2021.

  1. I’m officially unemployed 😁. This means no fat London contracting checks anymore. Mrs. FB is back into fulltime teaching in two weeks which means we’ll be on a single salary until I figure out what I want to do (I’ll have more on this in the next update)
  2. We’re going to buy a home this year 🏡🎉. This will have a pretty big impact on our net worth because I don’t classify a PPOR as an asset. It doesn’t really make a difference to us in terms of reaching our FIRE goals but the deposit we use as a down payment for a house will essentially be removed from these updates. I’m looking at debt recycling atm because the plan is to put as much money into the home loan as possible and either withdraw or use a line of credit to get that money back out so we can invest it but have that portion of the loan be tax-deductible (AKA debt recycling). I haven’t been able to sink my teeth into the finer details just yet but please rest assured I will be making an article detailing my experience.

 

Properties

No changes in the properties this month.

Property 1 was sold in August 2018

*DISCLAIMER*
The current value of our properties is a rough guesstimation based on similar surrounding properties. I only really update these when we get an official bank valuation

ETFs/LICs

The above graph is created by Sharesight

Not much going on here.

We didn’t buy any shares in December and won’t be buying any for a while now. The priority has shifted to buying a home and increasing our deposit for when the right property comes up. We were looking at spending around $400K-$450K but house prices have jumped significantly in 2020 and I think we won’t be able to get what we want for under $500K.

We have ~$70K in cash right now and I hate holding this much without doing anything. I’m obviously a big fan of having an emergency fund of around $25K (that’s what we’re comfortable with), but anything past that feels like wasted gains. We do have an offset that makes holding a lot of cash much more attractive (vs storing it in a HISA) but the amount of money being created all around the world worries me a lot. I don’t want to be holding the bag if inflation gets out of control.

 

Networth

A Firebug’s Guide To Moving To London + Investing overseas

A Firebug’s Guide To Moving To London + Investing overseas

I’m writing today’s article as if I could somehow post it back in time, two years prior would have been perfect.

You see, Mrs Firebug and I were packing up our life in Australia, about to jet off to the other side of the globe with a strong desire to see all the wonderful and interesting places that Europe offers. But quitting your job and moving to London can be scary shit yo! I’m a pretty confident person normally but you do second guess yourself when you’re out of your comfort zone.

But you know what? Working hard and investing during our early/mid 20’s left us in a really good spot financially and we avoided a lot of potential worry and stress had we made this trip beforehand.

Still, I really had no idea what to expect and wasted a lot of time and money simply because I didn’t know what I’m going to share with you in today’s piece.

I’m writing this guide to help ya out. If you fall into one of these categories:

  • You want to move to London
  • You already live in London
  • You want to move overseas but continue to invest in Australia as we have done

Then this is the guide for you!

Are you sure you want to live in London?

Before we dive into the article, I want to warn any would-be Londoners of one unavoidable fact.

London is stupidly expensive!

It ranked 19th in Mercer’s 26th annual cost of living report. To put that into perspective, Syndey ranked 66th and Melbourne came in at 99th.

You really need to ask yourself what’s important. We predominately moved to the UK to be close to Europe for travelling. Mrs. FB is a school teacher and she basically earns the same amount of money in London as she would in just about any other city or town in the UK. But most of the high paying contract jobs in tech were in London which is the reason we decided to move there.

Had I been in an industry that didn’t attract a premium in The Big Smoke, there’s a very good chance we would have ended up somewhere else like Liverpool, Edinburgh or Belfast.

IMO, you really should heavily consider living somewhere else if your salary is < £35K or you can get paid a similar wage somewhere else in the UK.

I know a lot of people who moved to London straight after uni that worked minimum wage jobs at a bar and couch-surfed through Europe. London would be one of the last places on earth I would choose to live if I had a minimum-wage gig (Cafe work in Thailand/Mylasia comes to mind). Don’t get me wrong, it’s an amazing city, but there’s an array of other really good cities in the UK where you can do lower-paid work and not have to pay the outrageous rental costs of The Big Smoke.

But if you’re still keen on London, please do read on.

Setting up life in London

Find a home

We lived in two apartments during our tenure, the first being in Norbury (Zone 3) before succumbing to the classic Aussie stereotype and set up shop in Melbourne 2.0 aka Clapham (Zone 2). We were paying £900/m (bills included) in Norbury for our room that had a private ensuite in a brand new apartment right next to the overground station. In Clapham North we paid £900 + bills (£60) per month for a classic Edwardian style flat that was a lot older but actually had more character which grew on me.

The Zones dictate how central the location is to the city (Zone 1 being the most central location) and they actually make a difference in the cost of public transport too.

Zone 1 is too expensive IMO (you may be able to find a cracking deal) and we found the sweet spot in terms of location and price was in Zone 2. Zone 3 was ok but if you’re planning to commute via bike, you could be looking at a 45-60 minute trip each way which is a little bit offputting for most. IMO it is so worth paying a bit extra to be closer to the city so you can cut down your riding time to be 20-30 minutes to the CBD. Check out this zone map for more info.

One of the best resources I can recommend is the Aussies in London Facebook groups. There are a few of them getting about and sometimes the groups that are a bit smaller (<15,000) are actually better. These groups are not only fantastic to find spare rooms, but they also act as a market place for second-hand bikes, clothes plus tips and tricks. You can usually get some killer deals on there when people move back to Australia and sell a lot of their stuff. If you post a pic of yourself with a bit of a write-up, there is a great chance that you’ll get some messages from people looking for a flatmate. I’m not on Facebook anymore but I’m sure there are a few people in those groups who’d benefit from this guide so feel free to share this around.

We personally found this way of finding a place much better than going through websites like Spareroom which was the website we used for our first place. Those other websites will charge you a premium to be able to access newly listed rooms/properties plus dealing directly with the flatmates was always a better experience even when we didn’t want to live in the flat.

It depends on what you’re looking for too. A lot of people will say that you should live with people from other cultures/countries to get the proper experience which probably won’t happen if you’re looking for rooms on an Australian Facebook page.

Here are my general recommendations based on our experiences for finding a home in London.

  • Flat sharing is fun and is a key part of the experience (way cheaper too)
  • Couples have it much cheaper than singles even factoring in the extra price couples sometimes have to pay for
  • Having our own ensuite was worth it (for us)
  • London has great public transport but there are some black spots. Try to get as close to a tube station/overground as you can. If you can get near a big hub (like Clapham Junction), even better
  • Biking is the best way to get around the city (more on this below)! Bike superhighways are a recent edition (I believe old Bojo had something to do with them actually) to London but they are superb and something I would try to live near to make my commute into the city a hell of a lot easier. There is a world of difference riding in a dedicated lane vs weaving in and out of traffic

Banking

Thank your lucky stars that you didn’t move to London ~ pre-2016. Setting up a bank account used to be one of the most bothersome tasks before the digital banking shakeup in 2014 that changed everything. Horror stories used to be common where people would move to London and get stuck in a shit sandwich loop. They couldn’t sign up for a flat because the rental agency wanted to see payslips/bank statements but the old school banks wouldn’t let someone open up an account that didn’t have a place of residency in the UK, but they couldn’t get a place without… yeah, you get it.

What a nightmare!

From what I heard, the 2008 financial crisis introduced extremely strict banking rules which meant a whole bunch of red tape and general pain for ex-pats trying to start a new life. Fast forward 6 years and the government started to ease the barrier of entry for banking licences and reduce the restrictions which gave rise to a new concept in baking… the challenger banks.

You might have heard of 86 400, Volt and Up. These are called Neo banks in Australia but they’re really just copy cats based off a concept that was started here in London.

I bank with both Monzo and Starling and can recommend both. They are seriously epic. The apps for both are extremely well developed and do everything you need. You can’t get a better interest rate for international travel either and there are no fees associated with the account.

But the best feature of all, hands down, is how effortlessly you set up your account. It’s 100% done through the app. No branches or dealing with people at all. You fill out a bunch of questions, record a selfie video saying who you are, take a photo of your passport and a few other documents and you’re done. The card gets mail out to your location and that’s it!

If I had to choose, I’d probably go with Monzo purely because it’s more popular and they’re cool features you can do if you share a meal with a group and everyone uses Monzo.

Phone Plans

Boy oh boy is it ganna be hard going back to Australian phone plans after you see what kind of deals you can get in the UK.

Mrs. FB and I are both with Voxi (a subsidiary of Vodaphone) and their plans are very good. Going from country Victoria where I was paying something like $40 for a gig of data which wouldn’t even bloody work half the time, to deals like these was unreal.

Unbelievable! £12 quid (~$24 AUD) for unlimited video streaming/social media. And the connection was never a problem for us here in the south of London.

It’s cheap and it works but the best feature bar none was definitely not having to get a new sim card when we were hopping around Europe to all the other countries. I love technology 🙏.

We can only vouch for Voxi because it’s the plan we used but I have seen other similar ones that were just as good.

Transport

This is a big topic and one that can potentially save you £1,000’s of pounds each year.

First things first. Download City Mapper right now! It’s hands down the best navigation app for getting around London. I’m a massive Google Maps fanboy and it took me a while to migrate over to City Mapper but man, once I did, I was well and truly converted. It is really designed for cities (there’s one for NYC, Paris, Hong Kong) and I found it to be a lot more accurate than Google Maps was when it came to service disruptions.

IMO, biking is the most superior form of transport in London and it’s not even close! You might be rolling your eyes because this is such a FIRE thing to say but trust me with this one, London is a really bike-friendly city with the additions of the Bike Superhighways that were added in the last few years.

I’m not even saying this because of how much money you save and the added benefit of the extra exercise, it’s generally a mood booster to cycle around this gorgeous city each morning when I was commuting to the office. It’s also the quickest form of transport (I consistently flew past cars commuting up High street on my way to the city) and you are never rushing to catch a train or bus. How many of you guys out there look forward to your commute in the mornings? If the sun was shining, my morning rides were more often than not one of the best parts of my day. Now granted I have been told that 2020 did have particularly good spring/summer/autumn and the weather does play a big part. But boy oh boy when the sun does come out, riding through Battersea park, over London Bridge and around the cute streets of Notting Hill are memories I’m going to cherish forever and I know I’ll miss those rides when we’re back in Australia.

Handy tip: Check if your employer participates in the Cycle to Work scheme. You get a bike for free at the start, then the amount is deducted from your pay every month until it’s paid off. Because the amount is deducted before tax, you end paying less tax, and therefore you pay less than the bike actually cost.

The London Underground AKA “The Tube” is a feat of engineering the likes of which I’ve never seen before. It boggles the mind how I can miss a train and wait no more than 90 seconds before another one rocks up. The efficiency for a network to run like this is mindblowing for my simple noggin 🤯 and I have to admit, when I first started catching the tube, there is a little bit of novelty it.

I have fond memories of landing my first contract and catching the tube to work in central London. I really felt like a Londoner power walking through the endless crowds of white-collar city slickers in my new chinos and overcoat… and theeeeeeeeeeeeeen the novelty wore off three weeks later 😂.

I really only caught the tube (pre-covid) when I had to after I bought a bike. It’s bloody handy to have it up your sleeve though.

One of the best features of ‘Transport For London’ (tfl) is being able to use your cards tap and go technology straight off the plane. You know how travellers have to buy a Miki card when they get to Melbourne and want to use public transport? You don’t need to do that in London which is fantastic. You as long as you have a VISA/Master Card with tap and go tech you’re good to start using the public transport system. You can even use your Apple watch to tap on and off. Pretty sweet!

Handy tip: If you’re under 30, the number 1 thing I would recommend is buying a railcard as soon as you get here and pair it to your Oyster card which is the equivalent of a Myki/Oapl (city transport card).

Unfortunately, you need an Oyster card to have the railcard discount apply to your fares (there was talk about linking the railcard to your bank card but not sure how far along that is). The card costs £30 and you can seriously make that back within 2 trips out of the city if you’re using the national rail for a big trip. The card typically saves you 1/3 of the fair for both buses and trains during non-peak times and you’d be hard-pressed to find anyone who wouldn’t save money buying this card.

It’s a digital card too which is cool. You download an app and when you buy national rail tickets, you just select that you own a railcard and you’ll get a discount (you’ll have to show the app if an inspector comes by of course, however, we never got asked to show our railcards).

Buses cost £1.5 per trip (or £1 if you use your railcard during off-peak) and get the job done. They aren’t as quick as the tube usually, but unless you’re in a rush, the buses are great and it can save you a lot of £££ during your stay.

Gyms

We had memberships at PureGym and TheGym which are budget gyms (around £19.99/m) and had everything we needed. You can keep fit just by running and doing bodyweight exercises tbh. I’ve just always prioritised a gym and those two above were the best value for money that I could find.

Tips and Tricks

Cheap Flights

Sky scanner is pretty much the go-to website for searching and comparing flights. However, I would recommend to book directly with the airlines especially with so many cancellations due to covid and the third party websites can be a nightmare to get refunds from.

Euro-star 

The Euro-star was a fabulous option for us to travel directly to Paris and Brussels. It can be quite expensive but if you book in advance you can get some really good deals and avoid the dreaded airport. It leaves from St Pancras International Station which is attached to Kings Cross Station.

Sending Money Back Home

I have sent over $60K AUD back home (to continue investing of course) using a company called Transferwise. They have the best rates for sending money back and the process is really simple. You can get a free £500 transfer by using my affiliate link* which means you won’t have to pay any fees.

I’ve also sent money from Australia to my Monzo bank account too.

* This link is an affiliate link and I may earn some commission from it. Please see my affiliate page for more info.

Finding a job

We only have experience in two areas which I’ll cover below. But there’s just so many different pathways to finding a job in London that it would impossible to cover them all.

I will say that for white-collar workers, LinkedIn is utilized heavily. Make sure that’s up to date and looking good.

Teaching

By Mrs. FB

Being a teacher is a great job to have when moving to London or any UK city for that matter. I am a Primary school teacher and was able to take care of a lot of the admin side of things before I left Australia. I chose to sign up with anzuk Education as I had a friend who had used them as her agency. They took care of a lot of the paperwork before my arrival and organised my DBS and International Police Check which you will need to work in schools. They will give you copies of these at your registration appointment. I found them to be organised and professional.

When we arrived in London I went to my registration appointment at the agency and spoke to them about what type of work I was looking for and they asked if I wanted to use an Umbrella company or PAYE. I chose PAYE because I was only using one agency and this would be a higher day rate in the end as the umbrella company take a chunk for their fees. I started with day to day supply work so I could become more familiar with the school system. This was okay but requires you to be flexible and move around to a lot of different schools which I didn’t always love especially when you get a tough class! I also felt quite overwhelmed trying to find different schools especially being new to London and using the tube and overground for the first time. I ended up only saying yes to work that had a reasonable commute time as some days it would take an hour to travel to the school.

I started at £135 a day (PAYE) and just accepted that rate initially. This was probably my biggest regret as I should have negotiated my pay from the get-go and would encourage you to do so. At the time I had 5 years teaching experience and my friend who was working with the same agency and only had 1-year experience started at the same rate. I learnt pretty quickly that all agencies are the same in that respect and will try to pay you as little as they can get away with unless you challenge them.

After a month of supply work, I ended up taking a long term contract for the summer term teaching a Grade 3 class at a Catholic school in Vauxhall. I was lucky that the class were lovely and I got along really well with some of the teachers at the school. We would go for Friday night drinks at the pub to debrief about the week. I preferred working at the same school each day and being able to make better connections with the staff and students but with this comes more responsibility and planning. I made sure to ask for a higher day rate from the agency and was earning £160 (PAYE). After the summer break, I was called by the agency to once again work at this school and cover a Year 4 class which I was very excited about, especially not having to find another school. I taught there until the pandemic hit and was then able to go on furlough pay through the agency which I was super grateful for.

Overall, my experience of teaching in London was really positive. My top tips would be:

  • Negotiate your pay: don’t be too scared to ask for a higher rate. I am a people pleaser and it was very difficult for me to do this but with a little pep talk from Mr FB I was a pro in no time 😉. You will hear the same spiel from the agency each time about them only taking a small cut for their fees etc (don’t believe them lol). You can even speak to other agencies to get an idea of how much they offer as a day rate and use this as leverage.
  • It’s okay to be picky: If you didn’t like the school or the class you were teaching for the day and the agency want you to continue working there, say no. I did a number of trial lessons/days at different schools before I accepted my long term position.
  • Find a contact at the school: If you like a particular school, make sure to talk to the deputy headteacher or whoever is in charge of finding supply teachers at the school. Tell them you had a great day and would love to come back, that way they can request you again through the agency.

Hope this was helpful 🙂

Contracting (in tech)

Okie Dokie, this part below is probably what I would have liked to have known the most when I got to London at the start of 2019.

A lot of people are attracted to contracting predominately due to the below three reasons

  1. Contractors charge more than their PAYG counterparts
  2. Contractors pay a lot less tax
  3. Contractors can deduct a lot of expenses

I had always heard how lucrative contracts were in Australia and you could reasonably expect to double your hourly wage in sacrifice of job security, Super, holiday pay, sick leave etc. etc.

This suited me down to a tee! We didn’t come to London to build a career or to try and save money, we wanted a job that would allow us to make enough money to live and travel basically.

And after 8 years in the public sector, I wanted to see if I had the chops to handle the private industry in one of the most competitive job markets in the world.

To say I was unsure is putting it lightly… and I’ve always been a confident/optimistic type of guy but quitting your job and moving to the other side of the world can strike fear into even the most bullish of people.

The below guide is everything you’ll need to know to land a high paying contract gig in London and something that would have saved me a lot of headaches and wasted time. It won’t cover all the administration tasks for running a company (too much to cover) but I’ll link to some great resources that go over everything in detail.

Limited, Umbrella or PAYE?

The structure in which you contract in is probably the first piece of this puzzle you need to figure out.

Almost all contractors I met in London were operating under a Limited company structure due to the major tax advantages. But that doesn’t mean it’s the best option for everybody so it’s good to know what the options are.

I know it can be a bit boring but you really need to know about a piece of legislation called IR35 because it has major implications for contractors and is more often than not, the deciding factor for what structure you choose.

In a nutshell, IR35 was introduced to stop contractors working as ‘disguised employees’ whilst receiving all the tax benefits on being a contractor. The lack of job security and employee benefits are the reason why contractors have tax advantages in the first place. Therefore if you’re working as a ‘disguised employee’, HMRC (UK’s ATO) will argue the point that you’re not accepting the increased risks and you will not be entitled to the tax advantages.

You can read up on their definition of a ‘disguised employee’ but I think we all known who they’re talking about. You know the guys that work a job for years and then decide to start a company and contract back to their employer at double the rate without skipping a beat. I’ve meant a few people who have done that within government over the years and it’s a smart thing to do really. The UK government see this as a tax loophole and I can understand why they want to plug it.

The definition of what is considered outside of IR35 (you’re not a ‘disguised employee’) vs what’s inside IR35 (you’re a ‘disguised employee’ and will not receive any tax benefit) is a grey area and will be assessed case by case if you ever get audited. Usually, the contracts are advertised as either inside or outside IR35 online which helps.

Limited Company

Generally, if the gig falls outside of IR35 and you’re going to be making > £30K then you’ll most likely be better off using a Limited Company (otherwise an Umbrella Company is the way to go).

Ther’s a lot more administration overheads Limited Companies though so be aware that you’ll have to do a lot more work. Raising invoices (and following them up 🙄), paying for insurances, registering your company and submitting a separate tax return etc.

The UK’s government website is a fantastic resource with a lot of really great written articles. If you’re convinced that setting up your own company is the right move, I’d strongly recommend this starting guide.

Umbrella Company

The major advantage here is everything is done for you. You save yourselves a lot of time and stress by going through an Umbrella as the contract is actually held by the umbrella company and the employer. You don’t get paid by the employer, they pay your umbrella company and then the umbrella company pays you.

The IR35 ruling is less important here because as far as I’m aware if you’re going through an umbrella, you’re going to be paying the full amount of national insurance (NI) tax so it’s pretty much irrelevant. This does open your options up a lot more though as almost all public sector contracts fall within IR35.

The main reason a lot of people start contracting in the first place is to make as much money as possible. It’s for this reason that most choose to go through a Limited Company vs Umbrella.

PAYE

It’s possible to become PAYE through an agencies payroll (if they offer it).

This option is the most inefficient (in terms of tax minimisation) of the three because you will have to pay full tax and NI contributions on all your earns and you won’t be able to claim valid business expenses.

Finding contracts

There’s a lot of different ways to skin a cat but I’ll cover what worked for me.

I used a website called Job Serve to find contracts but there are soooooooooo many places to find jobs it can be overwhelming. I wouldn’t recommend signing up to a whole bunch of alerts on various sites because the same job gets advertised across many platforms and your inbox will become unmanageable really quick.

There are a few niche websites that you need to pay to see ‘private listings’ but I never used them so I can’t comment.

I’m not sure if Melbourne or Sydney are the same but be prepared to deal with recruitment companies in London. It’s almost unheard of that a company will advertise a contract directly. 99% of the time it will go through a recruitment company and I have no idea why. The amount of people that are in recruitment in London is insane. Really high turn over rate too but I have heard you can make bank if you hustle hard without any quals or experience so it’s appealing to a lot of young people. It can be really frustrating dealing with a middle man that doesn’t know the requirements half the time and they never call you back to say if you didn’t get the gig 🙄. If you don’t hear from them within a week, it’s safe to assume that you weren’t shortlisted.

Here’s how the game is played:

  • A company decides they need a contractor for X amount of time and are willing to pay £Y per day
  • More often than not, a specific skill is required in a project that the company either doesn’t have in-house, or they need more of ASAP. It’s partly because of this urgency that contractors are paid as much as they are
  • The job description with requirements and nice to haves are prepared (half the time by just copying a template or another listing). Handy tip: don’t be discouraged by how much experience and skills are in these job descriptions. They are so over the top and don’t reflect what you’ll be doing 90% of the time. I once came across a listing that said you needed 3 years experience in a technology called Dataflows which would have been fine… except Dataflows was invented in 2018 😂
  • The new contract hits the recruitment market like a fresh shipment of crack to LA in the ’80s. An ungodly amount of recruitment agencies all rush out to and try to find a suitable candidate as they take a cut from your daily rate for however long the contract goes for. They will usually advertise the day rate with their cut already factored in (but always ask!). So if you see a contract for £450/d, the company that needs a contractor is probably actually paying something like £650/d but £200 of that goes to the recruitment company
  • If it’s at a good rate within the city, the candidates are usually shortlisted within a few hours (that’s been my experience anyway). Handy tip: When I was ready to land a new contract I would basically refresh the Job Serve page (with my keywords) every 15 minutes. As soon as a contract pops up that you’re interested in, call the recruiter to touch base with them which will do three things:
    1. It shows that you’re really interested in this contract. Recruiters want candidates to be able to go to interviews that same day sometimes (happen to me once). Make sure you get their actual email address so you can send your resume to them directly
    2. You have a chance to ask a bit more about the contract that may not have been in the listing. You can confirm that it’s outside of IR35, open to someone on a tier 5 visa, located within London etc. Sometimes you can get a bit more out of them in terms of what the project is about and this will help you decide on whether you do in fact have the skills to perform what’s required.
    3. You will prioritise your resume over others and the recruiter will actively look out for yours in their inbox if the phone call has been successful
  • If you’re still keen to get the gig, tweak your resume to make sure you cover all the key requirements (don’t stress if you’re not proficient in everything, just say you have some skills and back yourself to learn on the fly if needed. The goal here is to make it to the interview) and update your LinkedIn page to make sure it matches (yes, some people do check to make sure it matches your resume). This was one of my resume’s I used when I was applying for contracts last year.
  • If everything has gone right, you should be getting a call from a recruiter pretty soon (within a week) to set up your interview. Go in with confidence and crush it to secure the contract 👊
  • Once you win the gig, you’ll be sent a formal contract that lists a whole bunch of crap but you’re probably only really interested in making sure that the day rate is what was agreed upon and the details for your first day.
  • Rock up on the first day and go from there… your boss for the engagement will tell you who you need to send the invoice to and how accounts payable works etc. etc.

And there you have it, you’re officially a contractor in the big city 😊

The above is my experience but it may be different for you. I’d love to hear from an actual London recruiter in the comment section and get their take on the whole situation.

Mistakes

The two biggest mistakes I made when I was first looking for contracts were:

  1. Applying for contracts that were over a week old. Recruiters will always tell you that the contract hasn’t been filled yet but what they’re really doing is just hedging their bets if something happens to their current candidate. There’s no harm in applying for old contracts but all three of my gigs in London came from freshies and after speaking to a few recruiters at the pub, it’s really a game of first in best dressed with this type of work. I mean think about it, if the company really wanted to take the time and invest in finding the right person, they would probably just create a permanent position. Contractors are hired guns!
  2. Not jazzing up my LinkedIn for the first two weeks 😅. I cannot stress this enough, LinkedIn is really, really important in London for some reason. I did have a LinkedIn profile before I came to London but I hadn’t updated it in years. A big reason my phone was dead quiet during the first few weeks was because of how bad my LinkedIn profile was. No previous experience, no updated profile pic, no quals or skills.

Paperwork

I used a company called SJD as my accountant for both my personal and companies tax returns. If I could do it again, I’d just create an account with Free Agent and pay to use that product. It’s the cheaper option but it’s also the easier one IMO. My accountant didn’t do a whole lot TBH and it sort of annoyed my every time I saw the £110 go out of my business account each month. Their software was crap too. I would hire an accountant to help with the closure of the company and that’s about it.

It doesn’t take much to learn the ins and outs of using HMRC website and the Free Agent software really covers everything you need to run a small Limited Company used for contracting. The hardest part of contracting is raising invoices and chasing them for payment. But if you work for a good company that pays on time, it’s super easy.

You’ll also need to pay for public liability and indemnity insurance to cover your ass in case something goes horribly wrong. This usually costs < £1,000 depending on how much coverage you get.

Salary/Dividends

What many contractors do is pay themselves a small salary and then pay the rest of the money they made through dividends which have a much lower tax rate. This does depend on a number of things, IR35 being on the most important ones.

Resources

The best resource I can recommend hands down has to be Contractor UK. It’s predominately a forum board but it also has some really well-written articles that cover everything you’ll need to know about contracting in the UK.

It covers the entire UK but the community seems to be heavily London based and leans towards Tech jobs. I asked many questions on that forum and it helped me out a lot.

Tax/Investing whilst overseas

I’ve had a tonne of questions over the last two years about these two topics.

They usually go something like…

“AFB, how do you invest back in Australia when you’re in London” & “How does it affect your tax return”?

This is such a hard area to get good solid info on because of how different the rules can be for different circumstances.

Take our situation for example. We have been able to continually invest without much hassle whilst being overseas because all of our wealth is held in a discretionary trust fund with a corporate trustee. What I did before we left Australia was cease control of the company that was the corporate trustee of the trust and have my mum step in to run it while we were away. That meant that she had 100% control of our assets and technically could have gone on a YOLO trip of her own (plz no mum). The advantages of being able to distribute income from the trust to other people worked perfectly for our situation even though I had no intention of utilising the trust this way when I first set it up. When we return in a few weeks, I will retake ownership of the company and be back in control.

In hindsight, would I set up a trust just to make it easier if/when I moved overseas? No, I wouldn’t. Investing through a trust overcomplicates things and you can FIRE without one.

There are different strategies for utilising retirement accounts in the UK but it’s just so circumstantial with too much to cover. I never went on a deep dive into these strategies either because I was a contractor. Mrs. FB opted out of her pension scheme so she receives more £££ but paid more tax. This works for us because Super isn’t a part of our financial independence strategy.

International tax law is an insanely complicated and circumstantial topic and I’ve got no hope in hell trying to explain 1% of it in a blog post. So what I’ve done is invite Evan Beissel, a Tax Partner at Mazars to create a guest post (below) that will cover the basics.

Please let me know in the comment section below what specific questions you want answered. I’m going to get Evan on the podcast in 2021 to flesh out other topics we no doubt missed in this brief overview.

*FYI this isn’t a paid guest post. Evan reads the blog and offered his services and expertise for this article for free and AFB gets no kickbacks. I’m sure Mazars will get some traffic but the content below is of mutual benefit to both the AFB audience and Mazars.

Moving overseas and Tax, A short guide for Firebug’s

By Evan Beissel, Tax Partner, Mazars

Whilst tax law is an immensely complex topic, many of us can get away with only interacting with a small number of rules that are relatively easy to understand. For example, most working Australians
would know that when they prepare their tax return that their salary is included in their income and that certain work-related expenses and charitable donations may be deducted from their income to
calculate their taxable income.

However, one way that you can make your tax affairs substantially more complex is to move
overseas. Not only do you need to now understand the tax rules of another country where you are
living and earning income, but you may also still be subject Australian tax to some extent. You have
now entered the mysterious and wonderful world of international tax.

Whilst there is no one-size-fits-all playbook to these tax rules, there are some key concepts and topics that are common to many, which I will try and explore here and hopefully leave you with a bit more knowledge than you started with.

Tax residency 101

Tax residency is a huge topic and too big a topic to cover in detail here, but it is well worth covering
the basics.

Firstly, tax residency is a concept that exists separate from residency for immigration purposes. For
simplicity, for the rest of this article, I will simply refer to residents and non-residents as meaning in
relation to tax residency. Most developed countries (Australia included) tax their residents on
worldwide income whilst non-residents are generally only taxed on income sourced in that country.

Source is another topic that can get quite complicated, but as a simple example, salary
income from working in an overseas country would generally be sourced in that country, and
investment income such as dividends received from a foreign company is generally sourced where the company is based.

Another key issue to understand is that tax residency is not exclusive, and every country has different rules. So you can, for example, remain a tax resident of Australia whilst living in the UK, but also be a tax resident of the UK. In this case, double taxation agreements become critical – these are agreements between two countries on which country has priority of taxing rights in various
circumstances. Not all countries have a DTA with Australia, however, these are in place for most
developed countries including the UK.

In Australia, there are a number of residency tests that can cause you to be a resident for tax
purposes. The most relevant of these is the ‘ordinary resides test’ and the ‘domicile test’.

Under the ordinary resides test, you are a resident of Australia if you ordinarily reside in Australia.
Generally, this is not difficult to establish –for example, if you are living permanently in Australian do
not have a home in any other country. However, it can get difficult to establish where someone
ordinarily resides if they spend time in multiple countries and have multiple residences where they
regularly reside. There is a body of legal precedent to assist in these greyer areas, but for most
people, this is not an issue and it doesn’t warrant further discussion here. Suffice to say, if you move
overseas for an extended period and don’t retain a home in Australia usually you would be considered to no longer ordinarily reside in Australia.

The domicile test relies on the legal concept of domicile which in broad terms refers to a person’s
legal ‘home country’. Without going down a rabbit hole on domicile rules, as a starting point if you and your parents live permanently in Australia then it is likely you have an Australian domicile. However, if you or your parents immigrated to Australia, then it is possible you may not have an Australian domicile. This distinction is critical as someone with an Australian domicile is much more likely to remain an Australian resident when they move overseas.

Under the domicile test, someone who has Australian domicile is a resident of Australia unless they have established a permanent place of abode outside Australia. A permanent place of abode refers to a locality rather than a dwelling (e.g. you might establish London as your permanent place of abode, rather than a particular house or flat that you live in whilst you are residing there). Permanent does not mean indefinite but does require an intention to reside on a ‘permanent’ basis. There is no minimum time period that is considered to indicate permanency and this is an area of residency rules that can be quite difficult to establish with certainty.

Whilst the ATO have sometimes used a two year period as a rule-of-thumb, this is not based in legal precedent. Ultimately, whether you have established a permanent place of abode outside Australia will depend on the specifics of your own circumstances.

Tax issues for Aussies moving to London

So you’ve decided you want to move to London for a couple of years. What does this mean tax-wise?

Firstly, tax residence becomes important here:

  • Depending on your individual circumstances you may or may not cease to be an Australian
    tax resident. If you do remain an Australian tax resident, you would be liable for tax in
    Australia on income earnt in the UK
  • If you are living in the UK for an extended period you are likely to become a UK tax resident
    during your stay, and so will also be taxed in the UK.

To illustrate, let’s consider a couple of examples. For both examples, let’s assume you have the following income sources whilst living in the UK:

  • Salary income from a job in the UK
  • Rental income from an Australian property
  • Dividend income from Australian shares
  1. Retaining Australian residency

    In this case, it is likely you would also be treated as a UK tax resident whilst living there so you would be a dual resident for tax purposes. In broad terms, both countries will therefore tax all your worldwide income (note this is a simplistic summary but should be the case for most ordinary salary-earners with modest investment income). However, the country where the income arises (i.e. where it is sourced) would have priority of taxing rights, and the other country should provide a credit for tax paid in the other country subject to rules in each country which may limit the tax credit allowed. The tax paid on each type of income is summarised below.

    Australia UK
    First taxing rights Australian rental income Australian dividend income UK salary
    Second taxing rights (with credit for tax paid in first country) UK salary Australian rental income
    Australian dividend income
  2. Ceasing Australian residency
    If you cease to be an Australian resident when you move overseas, then Australia would only tax income sourced in Australia whilst overseas. However, for a non-resident of Australia, the mechanism for paying tax changes for certain types of income. Dividends, interest, and royalties (usually payments for use of intangible property) are no longer included in taxable income and taxed at marginal rates but are instead subject to withholding tax at a flat rate (subject to reduced rates under some DTAs).The common rates for interest and dividends are shown in the table below:

    Income type Withholding rate
    Interest 10%
    Dividends (unfranked) 30% (default rate) / 15% (treaty rate)
    Dividends (franked) 0%

    In the UK, as a UK resident, you would be taxed on your worldwide income with credits for Australian tax paid on your Australian income.


Investing whilst living overseas

So, can you continue to invest whilst living overseas? The short answer is a definite yes, but the tax
can certainly get more complicated than simply investing as an Australian resident. This applies both if you invest in Australia, of if you invest overseas.

Dividends

One important example is franked dividends. Our franking credit system is almost unique to Australia and does not operate well across borders. From an Australian perspective, both resident and non-resident investors receive favourable tax treatment of dividends that have been ‘franked’ with credits generated from tax paid by the company. Australian residents receive this benefit in the form of a tax credit that reduces the tax they pay (and may even be refunded if their marginal rate is less than the company rate), whilst non-residents do not pay withholding tax on franked dividends. However, foreign tax rules (including the UK) generally do not recognise franking credits and therefore the dividends are taxed without regard to the franking credit, this can produce a high effective rate of tax on the underlying company profits that have been paid out to shareholders.

Investing in overseas shares may not produce a much better outcome – dividends paid by these
companies would also be subject to tax without credit for company tax paid. Further, once you return to Australia, you do not have access to the franking credits you would have had if you had purchased Australian shares. The one possible advantage here is that foreign companies on average may pay less of their profits in dividends and therefore reduce the component of dividends in their long-term returns.

Ultimately, in many cases, it is necessary to accept some increase in tax paid on dividends whilst
living overseas.

Capital gains

Capital gains is another area where moving overseas can add significant complexity to your tax
affairs.

If you retain Australian residency whilst living overseas, then all your worldwide assets remain subject to Australian CGT under the same rules as if you remained in Australia. However, you may also be subject to capital gains taxes in the country you are living in.

Foreign residents are generally only subject to Australian CGT on Australian real property and certain similar assets. However, if you cease to be an Australian resident, you are faced with a choice for your non-Australian real property assets. You can choose to either:

  • Have a deemed disposal of all these assets for their market value, such that any capital gains
    or losses would be realised for Australian tax purposes; or
  • Elect to keep these assets as subject to Australia CGT until they are sold.

The best choice will depend on your particular assets and circumstances. However, if you choose the second option, that you will lose the 50% CGT discount in proportion to the number of days you are a non-resident of Australia. This reduction in the CGT discount also applies to real property that
remains subject to Australian CGT.

Any of these assets you hold when your resume Australian residency in the future (except assets that have remained subject to Australian CGT such as Australian real property and assets elected as described above) are deemed to be acquired for their market value at that time. This becomes the cost base that is used to calculate a capital gain or loss when you sell these assets.

If you sell assets that are subject to CGT in both a foreign country and in Australia, you should be
able to claim a tax credit in Australia for the foreign tax paid. However, to the extent you can claim the 50% CGT discount in Australia, you may only get a 50% credit for tax paid overseas which can result in a higher overall tax rate than if you were only subject to CGT in either country. Also, when you cease to be a resident of the country where you have been living you may have a deemed disposal under the local tax rules. In this case, you would usually not get any credit in Australia, as you do not realise a capital gain in Australia at that time.

At this point, you will hopefully have gained some understanding, whilst also understanding that this is a complex topic that can’t be addressed in full in one blog post. Unless your circumstances are very straightforward, I would strongly recommend obtaining professional advice that is specific to your own circumstances.

This publication is intended to provide a general summary and should not be relied upon as a substitute for personal advice.

Summing Up

London… what a city!

It’s almost a right of passage these days for young Aussies to make the pilgrimage across the Indian ocean and explore all the wonders of Europe. Now given you’re reading a FIRE blog, it may not come as a shock to you that there was a brief moment before we embarked on our YOLO trip two years ago where I considered not going because of the financial consequences. Nothing is truly free and this trip of a lifetime was not an exception. Quitting my job to travel the globe meant that we would have to delay our freedom, hopefully in exchange for some lifetime memories. And with the power of hindsight, I can honestly say that…

This trip has been one of the best things I’ve ever done in my life!

Do I still want financial freedom and only do meaningful work (FIRE)?

(Stone Cold voice) OH HELL YEAH!

But holy mackerel, I’m telling ya guys, the levels I’ve climbed on the life experience ladder over the past 24 months has just about eclipsed the previous 10 years.

And it’s not just about the travel. The work-related opportunities in London were one of the biggest surprises I had and it was almost better than the sightseeing. It’s so different from where I’m from and the city is just brimming with an entrepreneur spirit and outside the box mentality. Contracting can be tough but there’s nothing better than being apart of a really bright and diverse team and working together to build a solution.

London has not only broadened my horizons but the experiences I’ve had whilst being there has altered what I want to do once I reach financial independence (but that’s for another article). It’s an incredible city that will always be our second home.

Wrapping up now I’ll leave you with this…

I wish I did this trip earlier in life and really want to send a message of caution to any aspiring young Firebug’s reading this. Getting your shit together financially is really important and reaching financial independence is the ultimate money destination. But do not let an obsession with reaching this goal rob you of something you can never, ever get back… exploring this big beautiful planet when you’re young and growing. There’s a world of difference between travelling in your 20’s vs coming to see Europe later in life at 50…

 

Spark that 🔥

DEC20 Net Worth $859,482 (+$30,096)

NOV20 Net Worth $829,386 (+$31,586)

Ahhh 2020… the gift that just keeps on giving…

London went back into lockdown at the start of November, which to be fair, a lot of people were predicting. So it didn’t come as much of shock to most people but it still sucked. But what really felt like a Tyson uppercut was when one of our flatmates came home saying she had tested positive for Covid … 😱

She’s a Covid nurse who has to get tested multiple times a week but the funny thing is that she’s already had Covid before (she’s had the antibody test) and was certain she didn’t actually have it this time. Apparently false positives are not uncommon and it’s what most likely happened. Regardless, as a result, the whole household had to stay inside for two weeks straight without leaving the flat 🤪🤪🤪

The obvious question I had straight away was couldn’t she get tested again to make sure she actually has it? But the protocol states that even if she gets tested 100 more times and they all show up as negative, that one positive overrules everything and we all need to self isolate for two weeks inside without leaving… 🙃…goooooooood

I was already mentally preparing for the two weeks quarantine we are still going to have to do next month when we return home but this really took us by surprise and I was not ready for it at all! I’ve got a skipping rope and was still able to do bodyweight exercises but the lack of sunshine and fresh air really got me down towards the end there.

Because we were locked inside for two weeks, I started to look at gaming systems on Gumtree and thought maybe we can pick one up pretty cheap to help get us through the lockdown. After a bit of research, I decided to get a subscription to a cloud gaming service by Google called Stadia. Hopefully, there are some gamers who read this blog because let me tell you, as a former relatively hardcore gamer, I couldn’t believe that this tech even exists and works so well.

I’ve been eyeing off the new PS5 for a while and there was a pretty good chance I was going to buy one next year but after trying this cloud gaming stuff out… I’m almost certain these latest consoles will be the last ever made. Maybe this is a bold statement but I can’t see how all gaming doesn’t move to the cloud over the next few years.

When you sign up to Stadia, you get given a controller and chrome cast. That’s it. No console!

The controller connects directly to your WiFi and the chrome cast enables your TV to stream the game video. But because the computing and graphic rendering are done in the cloud, the screen that you actually game on can change. It’s so cool and works so well! I can play Red Dead Redemption 2 in the living room (small flex for London that we have a living room ps 😜) but move upstairs to my computer’s 27 inch if the girls want to watch a movie. It even works on your phone/iPad. Because the controller is connected to the net and not a console, you just have to pair the controller with your screen and boom, off you go!

I was also really attracted to fact that you don’t need a subscription to play Stadia games online (unlike Xbox and Playstation) and no big outlay to buy a physical console, the only cost is buying the controller and games.

I promise you I’m not an undercover Google employee because it probably sounds like I’m trying to sell the system. I’m just a tech nerd at heart who works with a lot of cloud technologies and was really impressed at an engineering level that something like this can even exist. Absolute madness!

Stadia just needs to get COD on their system as the lack of zombies was my only gripe 🧟‍♂️🔫

Net Worth Update

Ho ho ho, did Christmas come early this year 🎅?

Over $50K in gainz from shares and Super which hid an otherwise extremely expensive month since we booked our last holiday and flights back home for next year. I know there was some really positive news on the Covid vaccine front but it’s pretty insane how much the share market went up in November. It’s funny to look at some of the comments that were flying around in March/April. Covid is just another nail in the coffin for trying to time the market.

How many of you guys out there are still on the sidelines waiting for the next drop? What happens if the markets never drop below what they are at right now huh? We all know that eventually, they’re going to reach new heights, but new bottoms are never guaranteed.

All this printing of money does make me wonder about the long term outlook for fiat currencies around the world. I sleep so much better at night knowing the majority of our wealth is stored in businesses and real estate. Don’t get me wrong, having cash on hand is handy. But I can’t help but feel the purchasing power of my emergency account is copping a flogging every time the government drops some sort of stimulus.

Properties

Since it is related to property (just not in the investment sense) I’ll add it in this part…

I’ve been looking at home loans recently and have been blown away at how low an interest rate you can get on a fixed mortgage. We have been looking at houses since the start of the year because we want kids one day and I’ve been crunching the numbers on renting vs buying for our area and the results are leaning towards buying which shocked me a bit. Much of this has been driven by low-interest rates though. I’d love to know who you guys are with and what rate your paying (also if it’s fixed or variable) in the comment section, please 🙂

 

Property 1 was sold in August 2018

*DISCLAIMER*
The current value of our properties is a rough guesstimation based on similar surrounding properties. I only really update these when we get an official bank valuation

ETFs/LICs

The above graph is created by Sharesight

Wowzers!

The ASX goes bang in November.

I was thinking about this the other day. An investor’s reaction to sharemarket movements can be a reflection of their personality in many ways. You see, it doesn’t matter what the sharemarket does, I always find a reason to be happy about the result.

If it drops, that’s awesome! I can now pick up great companies at a reduced price. If it rockets upwards, that’s also great, look at how much wealthier we just became. Even if it goes sideways I usually can pick out some positive in the markets low volatility and how good it is 😅

I’m an optimist at heart and investing/life is a lot easier if you have a positive mindset. I truly believe that!

 

Networth

Ask Firebug Fridays 24

Ask Firebug Fridays 24

Nothing written below is financial advice. The below questions and answers 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.

A bit of a different AFF today guys,

It’s been ages since I last uploaded any audio content and I wanted to give you all an update as to what has been going on.

I also touch on a topic that I’ve already covered but my thoughts have changed over the last few years and I think a few people would like to hear what I would have done differently if I had to start my FIRE journey all over again from scratch.

Enjoy ✌

 

Heads up grammar Nazis, the following transcription is half human half machine and not 100% perfect (nowhere near it 😅) so expect a few typos and errors…

Intro + Podcast update (0:57)


Hey guys. Welcome back to another episode of Ask Firebug Fridays. It has been a very long time since I last recorded one of these episodes, uh, or any of my podcasts for that matter. It’s been nearly six months. Since I last produced any audio content, and I felt like I needed to just give you guys an update as to what’s been going on during the last half of this year with Aussie Firebug.

And I also wanted to touch on a topic that I’ve actually already covered before, but my perspectives have, has changed on that topic over time. And I think it will continue to evolve, but I wanted to just get, give you another update on that subject matter, because I think it might help out a few people, but first let’s talk about the podcast and generally.

Aussie Firebug content of light. Let’s get into it. Okie dokie. So unless you’ve been living under a rock this year, you’re probably aware of the global pandemic that has gripped the world. So COVID hit in March this year, 2020. And my company that I’m working for basically went into overdrive. So I’m working for a startup and for anyone out there that hasn’t worked for a startup before, it’s not uncommon for the first couple of years.

Uh, w at working for a startup or when you’re working for a startup that it’s pretty full on. You’ve got the founders, they’re the early adopters. People are all trying really, really hard to make this new idea, make this new company work, and it can be quite stressful. And there’s a lot of work and people are putting in, you know, ridiculous hours.

So I’m working for a startup and then when COVID hit and everyone started working from home, I felt like that workload and the stress and everything was compounded a lot by people working from home and maybe, you know, managers, not sure if people are working as hard as, as they could be, or as efficient as they could be if we were in the office.

And I’m sure that, you know, people out there that are listening to this pod, uh, that are, that have been working from home this year. You can probably back me up when I say that the lines between what is work and what is not work is really, really blurred at the moment. And I guess, um, you know, we’re all trying to adapt to this, this new world that we’re currently living in, but I found myself on the computer.

You know, past five 30, just finishing off a few little bits and bobs, uh, for the job. And next thing you know, it’s like seven 38, and you know, I’ve got to have dinner, I’ve got to go to bed soon and it’s a really unhealthy thing to get into the habit of doing, but it just sort of. I know, it just sort of happened to me and a lot of my colleagues and essentially you do that long enough.

You’re going to get burnt out. And that’s exactly what happened to me this year. I was sick of staring at a bloody computer screen for potentially, you know, 12 to 14 hours a day. Well, I don’t know about you guys out there, but I do a lot of my leisure stuff. Um, in my leisure time playing video games or watching YouTube videos, it’s on the computer or it’s looking at some sort of screen.

And even I was thinking about this the other day, like even when you’re at work, yes, I’m still working on a screen predominantly, but I get breaks all the time. Like if I’m going to. You know, the coffee maker or the water fountain, or, um, just going into a meet meeting with people and like looking at them face to face.

It’s like it gives your eyes a break from the screen. And it’s crazy to think about how long, all a whole bunch of people working from home all around the globe have been staring at a screen for this long, for this amount of time, without any breaks. Like I literally wake up, I’m staring at the screen all day.

I’ve got all my meetings there. And, you know, this is, this is nothing new. A lot of people are going through this. Um, and actually funny side story, not, not really funny, but, um, I actually had to get glasses during lockdown, which was, you know, I’ve never needed or never felt like I’d needed glasses before, but they, the, the glasses that I did end up getting reduced the stress on my eyes or something like that.

Um, so it wasn’t so much that I need them to see per se it’s just to help me, like, not. Concentrate too hard on the screen or something. Uh, it helped with the headaches anyway, so they must be working. But, um, it was funny to listen to the optometry, say that the amount of people that have booked in to get new glasses during lockdown has just been through the roof, which I can totally understand with everything that’s been going on.

So anyway, I was working too much and the last thing I wanted to do. Is jump on the computer to do, even though it Aussie bug. And this podcast is a passion project when I didn’t have to be in front of a computer. And especially after like the hardcore lockdown finished in London and we were able to go out and weekends and things of that nature, I was getting out, I was getting out on my bike and if we weren’t like exploring London on the weekends, we did do a few trips overseas during the weekends and stuff like that.

Um, so I really just haven’t. I, I haven’t wanted to jump on the computer during my spare time. And that’s where a lot of the Aussie Firebug content that I do make happens. It’s either after work or on the weekends, maybe in the morning or something like that. But I just felt like I had to get away from the screen as much as humanly possible when I wasn’t at work.

So as a result, uh, you can imagine Aussie Firebug content fell off a cliff, but I really just wanted to give this update to you guys because I’ve had a few people actually messaged me saying, you know, a steward on the podcast is the podcast. When’s the new episodes coming out. And I thought I better release something just to let you guys know that it’s still, I’m still recording episodes.

And I actually still have. Um, I currently have a lot of episodes in the editing room and I’m sure, um, maybe there’s people listening that have been on those episodes and sort of, uh, wondering when they’re going to be released. And for, for those of you out there, I definitely am going to release them and edit them and stuff like that.

I just, I found it really hard to, as I said, have the willpower to be in front of a computer when I, when I don’t really need to be. And I guess that’s, that’s the beauty of running, you know, a passion project and a side hustle is like, I only have to do it when I want to do it. I’m really just crawling to the finish line with this contract.

It’s sort of killing me a little bit, this contract. So I just want to get it done. Finished the year, have a really good rest and I’ll be back better than ever in 2021. And I’m really excited about, I’ve got some really good podcasts guys in the editing room that I can’t wait to get out. Uh, but it’s nothing is going to be released until next year.

On the blog side of things, I’ve always done my monthly net worth updates and they will continue. But in terms of the podcast or any audio content, uh, that nothing, nothing new will be released this year. It’s going to happen in 2021. And that’s really the update and that’s really all I wanted to say with this.

So I am taking a little break and see you guys next year.

 

What I would have done differently if I had to start all over again (7:58)


Okay. So to finish the last ask, Firebug Friday episode of 2020, what a year it’s been, uh, we’re going to revisit a question that I’ve already covered, but I’ve had some, as I mentioned in the intro, my thoughts on this has changed quite a bit.

Especially in the last two years, it’s really been a, a learning experience for me. And I think I’ve really grown as a person and I’ve really broadened my horizons in the last two years. And I, um, I’m excited to speak to you, you guys about that, especially in regards to fire as well, like it, cause it goes beyond fire for me in the last two years, but I think there are some, some great lessons that I’ve learned that I can apply for.

Uh, the, the journey that is financial independence retire early and, um, yeah, so let’s get into it. So the question is what would you do differently if you were starting again from scratch today? And it’s a great question. Um, and I think a lot of people ask that when they knew to find they’ll come into the forum boards or the Facebook page, the Aussie fire discussion group, and they will ask this and that they’re hoping for people that have done the journey to, you know, speak on their experience.

So I want to break this down. I really want to focus on the financial independence side of thing for, for this question, because the retire early part, I think is a lot more philosophical. And I could probably do a whole episode on the retire early and why it’s important and you know, what, what, what should be the driving factors of why you even want to go on this journey to begin with?

But I think it’s going to be too long. If I, if I go, if I delve into that, Um, that sidebar. So I’m going to stick with, what would I do differently if I’m starting again from scratch today in regards to financial independence and reaching financial independence and not necessarily the quickest way possible, but doing it the best way?

I think so that’s not depriving yourself of everything, but I just, there was, there’s a few things that I would tweak. So first of all, I’m going to break. Financial independence for me is there are three major components. And then there’s sub components within those major components are of reaching financial independence.

So the first major component and the most important one, and I’m going to list these in order of importance as well, which I think is important. So the first one is the savings rate, which I think is universally regarded as the most important thing. And for good reason, amongst the fire community. It, it has that double whammy effect of not having to produce as much passive income to live a great lifestyle and also having more money to deploy, to invest.

So as you, you know, as you get a higher savings rate, both of those things happen at once, which is why it is so important. And it definitely is, uh, the main thing people should focus on. Yeah, the second major like segment or part of reaching financial independence, in my opinion. And the second most important.

And Mike, this is where my views are starting to change and has been updated in the last two years. Is income potential. So that means your earning capacity. And I’m going to go into detail in a minute, but that is in my opinion. Now I’ve changed my mind. I had a, I actually didn’t even think about this one, um, till I moved overseas, but income potential is a major one that does not get.

Enough limelight in the fire community. And the last major piece for this is obviously investing because you need that passive income. But I think that way too many people focus on investing and even they, they skip a lot of people when they first discover financial independence, they will skip the savings rate.

And they definitely a lot of people, even that have been around the financial independency in a long time, or skip the. Income potential, uh, and they’ll go straight for it. They will go straight to investing. Right. So you’ll always see questions about investing, you know, VAs 8,200. The Vanguards diversified high growth index versus, you know, make your own portfolio.

There’s a whole bunch of questions that always gets asked on the Aussie fire discussion group on Facebook, which I’m a moderator of. And it’s fine to ask those questions. Don’t get me wrong, please. You know, it’s not like you should stop asking them, but really the bread and butter over reaching financial independence is really your savings rate.

And your income potential in my mind, if you can nail those two things, the investing side, why whilst important, I don’t want to downplay, like there’s not important, but it’s really like, it’s, it’s largely out of your control and you should really focus on those other two things, which is why I want to, I want to dig deeper into those two things for this question.

And we’ll start with obviously the first one, the, uh, savings rate. So let’s start again. Let’s start from the top. The savings rate. Is obviously how much of your paycheck you can save. And it’s got that double whammy effect. Like I said, the higher your savings rate, you have the more money you have to invest, but also the other side is the less you, the less passive income you need to be able to live your lifestyle.

So that awesome double effect is happening now. My views on the savings rate has definitely changed over the years. And really what I would say I would, if I was starting again from scratch, I would focus on the four big areas that 98% of people, 99% of people will most likely spend majority of their, or the majority of their expenses will fall into these areas.

And they are housing. Food transport and holidays Eve, you can nip these four big areas in the bud and establish good financial habits early on in the piece. Most of the other things take care of themselves. Now I that’s an, that’s a, a viewpoint that I didn’t have my whole life. Actually the majority of my life, I really sweated the small stuff way more than I really should have to be honest.

Like I think back now, And I cringe a little bit about how, how much of a tight ass I was back in the day. And I definitely like, I hate using the word regret because I, you know, you can’t change it and it is what it is, but there are definitely things that I could have done differently. And I, I would have done differently if I was starting again from scratch.

And I’ll give you an example because when I was younger, actually, between. Like the ages of maybe like 14 to about 26 or 27. I was probably, you know, one of the biggest Tituss you’ll ever meet in your life. And. I was, I grew up a little bit crazy with how much money I was trying to save around about the time that I discovered fire.

And I used to set these hardcore budgets, like $2,000 a month. That was all I was allowed to spend. And it didn’t matter what emergency popped up because there was always some sort of thing that popped up during the month, but I just have to, I had to figure out and deal with it. Right. So if I had to get new new tires on my car and I had to spend my four or $500.

Well, that’s $500. That’s like 25% of my budget was gone for that month. And I always worked around that. Like, you know, that the famous saying, pay yourself first. I definitely did that. I was like living that mantra heavily. So when I got paid, it was like all of it was saved. And at that point I wasn’t invested in the share market.

I was saving for a deposit for investment properties. And I would stash that money away and then whatever money I had left over, I would just have to deal with it. I had to make it work. Right. So it was like, I looked back and it was definitely, I saved a lot of money that’s for sure. But now that I’m older, I do sometimes wonder, did I sacrifice?

And I give something up in terms of friendship groups. Uh, in order to squeeze out that little, few percent of a savings rate and was it worth it and looking back now, I’m not too sure it was. And like, if you, I’m not saying I lost any friends, you know, cause I was too much of a tight ass, but I really like, you have to, if you’re getting invited to social gatherings and events, And you’re constantly not going because you’re worried about money and like saving as much as possible, which I definitely went through a few years of that back in the day you’re going to get, or your friends are going to stop inviting you to those events and those gatherings.

And I’m still, I still have mates and I’m still friends with the people I grew up with and everything like that. But yeah, I like since moving to London and. Going out and not worrying so much because I’ve definitely treated my time overseas as like an adventure and a holiday. Um, and so I do go out for beers with my work colleagues all the time.

I’m not too, you know, I, I hardly even worry about, uh, you know, if we go out for dinner and everything like that. And what I found is I still track how much we spend religiously. And I don’t think that’s just like a habit I’ve always got. And we actually aren’t even spending that much more. We really aren’t.

And I feel like because we have good financial habits built in already. We can like live a little bit and the small stuff really doesn’t matter as much as I thought it did at the start. So as long as in my mind, as long as someone’s got housing, food, transport, and holidays, Within reason and optimized as much as possible.

I think that. Yeah. You know, going out and having beers with your mates and spending money on that coffee. I don’t think it matters as much as I thought it did at the very start. Now I know that there’s going to be people out there that have done the math on it. And I understand all that. Trust me, I, I get all that.

I was living in a spreadsheet myself, uh, at the start of the journey. So they can say like, it adds up over the course of the year. Then you compound that you invest at this. This is how much money you gave up. I get all that, but I think sometimes it’s okay to just not sweat the small stuff and to live a little bit within reason.

If you’ve got those four things under control, I think you’ll be more than okay. And if I could go back, I’d probably change a few things at the start of my journey and. Last point on this, the housing part of the equation is, is probably no, I think it’s definitely the biggest part because the other three, like you can just follow common sense.

You know, food, try to make as many meals at home. It’s going to be healthier. It’s going to be cheaper, better for you, et cetera, et cetera. Um, transport, you know, don’t buy a brand new $50,000. You’d have Europe, an apprentice tradie. It’s going to set you back financially a lot. And holidays, you know, do you really need to go to, uh, the, you know, the latest Island that the Kardashians went to or something, or the latest girl on Instagram has been not learning videos too.

Pick your holidays and, you know, be as efficient as possible with it. So I feel like those three areas are pretty self-explanatory, but the interesting one, and just from my experience, uh, in the last couple of years, like just growing up with, with people and seeing what people do, my people, I went to high school and stuff with housing is such an interesting one because, and I’ve thought about this a lot.

A lot of my mates, uh, boys and girls, they started working and pretty much everyone’s every like the group of friends that I grew up with and like, uh, that generation, like I was born in 89 and, um, I’m a millennial also. So our parents had a, really, a strong sense of home ownership was making it in their eyes.

And so like, if. It was constantly repeated at the dinner table. Like this person has bought a house like this, this young, you know, it might one of my oldest sister’s friends. It was like 22. She’s got a house. Well, she must be doing so well for herself. She’s setting herself up like. I think a lot of people out there listening, even my, uh, Google analytics has anything to go by, fall into the same age range that I’m in.

So I’m hoping that a lot of you guys out there can relate to this, that our parents, like if you’ve got boomer parents getting a house and getting a home, owning a home really young, it was like the ultimate sign that you’re doing well in life, which is really funny because. I just, I don’t think that our generation, the millennials value, and I don’t want us to be speaking on behalf of a whole generation, but our generation is a lot different to our parents’ generation and a hell of a lot different to our grandparents generation as well, because that’s, that’s the other thing I was thinking of, like my grandparents on my dad’s side is Italian and they migrated to Australia.

So. I could understand that having a bit of land to call you on your own and like starting this new life and by getting a house that you can raise your family. And that was like a big deal. That was like the dream you go to another country, set yourself up, right. Get start a new life. And then they had kids which were our parents, the boomers, and they’ve sort of grown up with the same, you know, similar mentality, like get a house.

Start a family. Like that’s, that’s sort of what the goal is in life. And I really feel. Like that is not the case for millennials. We do like, and I think the statistics back it up as well. We do a hell of a lot more traveling and we’re exploring the world and we aren’t working the one job for our whole career.

Like those days are really, um, they’re gone that, you know, you go to a, you started a corporation, you work hard, you work your way up the ladder. I really don’t think like there’s going to be people. I’m sure that do that still, but, um, they’re far and few in between. Most people will have a lot of jobs throughout their career.

And most people as well, most millennials, uh, have traveled way more than their parents. And that’s like due to a whole bunch of factors, um, a higher standard of living, you know, travel costs coming down and stuff like that. But the point I’m trying to make here, and I’m going to tie this back to the housing point is a lot of these people that I grew up with and I’ve seen, you know, in my home town and everything.

They ended up getting, they end up buying these like four bedroom houses when they were 22, 23. And I’m not saying that that’s like a bad thing because it’s not it’s, you know, you can sit yourself up and you can pay it off. If you’re lucky, you know, by the time you hit 30 and everything, and that’s good, that’s better than most people.

Right. But if we’re talking purely on finances, and this is a point that is often, often overlooked, there is an opportunity cost that comes with buying such a big house, or to put it a another way, taking out such a big loan at such an early age. And half the time, like, hopefully, you know, you guys can relate a little bit and you, you might know someone that has done this, but half the time these people, they buy, they buy the humongous house and they only live in like 20% of the house.

They might use the kitchen, their bathroom, their room, and then there’s like three empty rooms. They got this big space of land, this big block, and they’re not using hardly anything. But what they don’t realize is they’re paying for all that. So, like, that’s not, you know, they’ve got this big house and everything, but they’re still paying for it.

And they have so much of their capital tied up into an asset that isn’t produced. Are you seeing any income? Now? You can argue, you can say, yeah, but you can sell it later on for a profit and pay no tax, which is the nice thing about, um, the primary place of residency. And yes, that is true. But. You are locking away so much capital that it isn’t able to compound when it’s not producing any, any income.

So that’s a lot different, a lot different than investing or buying an investment property and, and living in a much smaller area and really trying to save a whole bunch of money and, and put that into an income producing asset. It’s a lot different. And I’m not saying either way is right or wrong, because as many people know there’s intangibles that come with buying a house and a lot of people buy a house for different reasons.

But if we look purely from a, from a financial point of view, All I’ll say, is that be sensible when it comes to housing and either you’re going to buy a big house early on and like, that’s what, that’s what you’re going to do. Just know that you are going to be paying for it. And that opportunity costs is there.

So you really need to ask yourself, do you really need a house that costs that much money? And do you even know what you want to do for the next seven years? Because if you don’t really know what you want to do, So, what we did is rented this tiny two bedroom flat in the country that cost bugger rolls like.

At one stage, it was like $190 a week, which is just really, really cheap. And we just poured money into income producing assets. And I really feel like that sped up our journey a hell of a lot, and it almost would have been, it almost in some sense would have been crippling if we had taken out a decent size loan early on in the piece.

And what’s funny is that we were really close to doing that back in like 2013, where. You know, are we going to rent? Are we going to buy? And I can tell you that I’m so glad that we went down the renting path because not only has it opened up doors and it’s allowed us to travel and everything, because sometimes I think if you’ve got a house, are you really going to take that risk and maybe move to another place to get a new job or go overseas or anything like that?

If you’ve got this mortgage tied, To your name and everything. And I think that I really truly think that that might put a lot of people off. So I think you just got to ask yourself, do you really need to own a home? And I think for people, with families and stuff like that, yes, that’s a good reason.

That’s what we will eventually own a home for that reason. But I think that too many people, uh, pushed in the direction of homeownership, especially by their parents when they don’t even really know what they wanted to do with their life. And, uh, yeah, it’s just something to be aware of. But either way you go and I guess I’ll wrap it up now in this, with this point is just be sensible and try to optimize the housing as much as possible.

So whether you rent. Do you know, do it appropriately and sort of live within your means and get that nip that in the bud. And as I said, good financial habits early on in the piece. And if you buy a house, try to buy appropriately because bigger is not always better. And you’re going to have that opportunity cost.

If you tie up all your capital in a non-income producing asset. You know, it, it could, you could miss out on many years of, uh, compounding. That’s all I’ll say, all right, the second major part. And I think this does not get covered enough and my eyes are really opened and I’ve really broadened my horizons really.

In regards to this part is the income potential on the road to financial independence, right? I wasn’t even thinking about this and I didn’t really, even, this is like a brand new area for me. Um, but I did actually recently contribute to Pearl is ebook called Aussie FIRE,  where I spoke about how important it was to increase your income and how it’s often overlooked.

And it has taken me years to realize this, moving to another country where my skills are in demand has really broadened my horizons. Your earning capacity is the biggest asset of all during the accumulation phase. Now I want to, I want to repeat that because it’s SU I, I feel like it’s super important and it doesn’t get spoken about enough in the fire community.

Your biggest asset is not your share portfolio at all. It isn’t your biggest, your biggest asset is your earning capacity. Now, once you’re finished with the accumulation phase, Yes, your share portfolio will, you know, it will be so large that it’s going to be doing the heavy lifting, but it, that doesn’t kick in until the very end and on the journey towards financial independence, you really have two major leavers at your disposal, how much you’re willing to save and how much money you can earn.

And those two, those two are the drivers to financial independence. Trust me on this. Like I’m. W we, uh, to also use away from the angle and we are, we’re almost on like cruise control now because it’s just going to happen regardless if I add to the snowball or not, we’re going to get there. But, um, the, the savings rate is super important.

It’s number one. So have that optimize key, like dial that in, but then try to increase your income. Trust me on this, investing in yourself by upscaling. And getting that education and maybe moving jobs every few years will annihilate any passive income investment returns during the accumulation phase, which is what I’m assuming the bulk of people out there listening are in.

If all we’re starting again from scratch today. What I would do differently is I would jump onto Google and find out how much, like look at the people that are in a similar age bracket, experience, demographics, you know, our location, everything like that, and find out how what’s the average, what’s the medium, uh, wage for someone in my job description or someone in my role.

Right. And if I was earning. More than the average, then that’s awesome. There isn’t really many low fruit to pick if I’m earning more than the average, because I’m already doing really well. If I’m in, if I’m average or, you know, in the medium, um, I can look at like, what is the next jump in my career that I can take that can get me that pay rise and.

This is a really important point for people that are earning below average incomes, especially in your field. This is like one of the, this is one of the, I’m not going to say easiest, but it has to be one of the lowest hanging fruits that you can go after. If you are earning below average salary, if you’re putting as much effort into optimizing your savings rate.

And especially if you’re putting a whole bunch of effort, Into trying to calculate and work out the, the most efficient and most optimized investing portfolio. Maybe put some of that effort into actually trying to jump the ladder at work and getting a raise or even better. And what I found through experience is to job hop into a new position because that in my experience, that is the best way to get serious gains in your salary, your yearly, your yearly salary.

Can increase astronomically. If you are willing to move somewhere where your skills are in demand. Now, of course this isn’t going to work for everyone and I’m not factoring in, you know, people’s situations and everything like that. But I’m talking about purely from a financial independence point of view.

If you are looking to increase your income. Job hopping is the best way to do it. In my opinion, yes. You’ve got to have the right skills and experience helps and all that stuff and having the right certifications. But if you are willing to move, I feel like that is the easiest way to increase your income substantially a lot easier then to do it through investing.

Like if you think about it, let’s just say that. By you going to another place or moving jobs, you can potentially get like a $20,000 raise in your salary, which I don’t think, you know, obviously there’s, there’s a variety of people listening in from various backgrounds and everything, but it’s not unheard of for someone to go from, you know, 70,000 to $90,000.

Right. It’s it’s not that crazy. How long would it take for you or for anyone out there to invest your way to $20,000 worth of passive income? It’s going to take a hell of a lot longer to do that than it is to put in the effort and to grind away at increasing your income, whether it be in your job or maybe doing a side hustle or something, or doing something after work, if you’re like maxed out in your earning potential in your current job, then I would seriously consider starting a side hustle.

Even if it only generates a, you know, a thousand bucks a month. That’s still $12,000 a year. And again, how long would it take you to generate $12,000 from passive investing income? It’s going to be a hell of a lot longer. Like this is a real game changer. It can be a massive game changer, uh, to anyone on the road to financial independence.

And I really feel it’s not spoken about. Nowhere near as much as it should be because the savings rate is always the best. And I definitely agree with that because a dollar saved is a dollar earned and you’re not going to pay tax on it and all that good stuff. But I’m just speaking from experience.

When I moved from Australia to London, where my skills were more in demand and there was more of a, you know, more lucrative jobs over here and stuff like that. I more than doubled my earnings when I moved over here and my sort of my brain sort of exploded to be like, I never knew opportunities existed like this for people with, you know, within my skillset.

I always knew that there was higher paying jobs in the city, but I didn’t know it was like this. And you don’t know until you try. All I’m saying is once you have optimized your savings rate, In my opinion, try to increase your income. That should be the next biggest thing on anyone’s list. Investing is definitely important and like, you should understand investing, but once you’ve got the basics down, you really want to set and forget and automate that as much as possible.

And I think as well, that a lot of people in the fire community they’re hustlers at heart. I, I truly believe that like a lot of people that come to this community. And stick around and are actually, you know, trying to reach financial independence. They’re not just, they’re not just cruising the forums, not, not trying to actually implement this lifestyle, that the proper ones that are doing this.

I really think that there’s ambition and there’s like entrepreneurial spirit in a lot of people that pursue fire that enthusiasm and that heart, that willingness to work hard and like do the grind and everything. It is much, much better suited. To try to increase your income. Then it is to try to get the most efficient and perfect portfolio mix in the world.

And I don’t think enough is spoken or written about that part of financial independence where savings rates. Awesome. But so is increasing your income. And like I said, your earning capacity is your biggest asset. And that’s taken me many years to realize that. And lastly, the last major part or, or major component of reaching financial independence is the investing.

I’m going to keep it short and sweet with this. If I were starting again from scratch, I would just keep it really, really simple, even though I had success with property early on. And a lot of that was to do, was to do with luck, or it’s hard for me to say that I wouldn’t do it again because if I knew hindsight is 2020.

So if I knew. I knew I was going to make as much money. I probably would have done it again. I definitely would have done it again, but if, I didn’t know, like if it was going to be a random timeline, I probably would just go straight to a. Passive income share portfolio. And the only reason I say that is because just my mind.

Yeah. So at the moment, I don’t want to be renovating houses anymore or anything like that. And I’m sort of just over that and I’ve just got other ambitions. There’s other things that I want to do. So I would just be, I’d go the lazy route. Um, passive style index investing. I probably would go either VAs or a 200, either one is fine for my Australian component.

And then I’d, I’d even, probably go, um, VGs. Over my current one that I got the VT VTS and VU and own that. I’m only saying that because of the, uh, annoying w eight Benny form, even though I really like the VTS and VU, and I like to tweak, I like to be able to dial in the, how much is the in the U S how much is in the world and everything like that.

That super duper simple I’d either go various a 200 VGs. Or I would just go the Vanguard, highly diversified index, high growth option. I think it’s called the, the VD HG option and just, and that’s where I’d keep it. And I would just I’d invest in a 50 50 split between me and ms. Firebug and that’s it.

That’s what I would do if I was standing in from scratch today. Super duper simple. So to recap that, and to conclude that. I would focus on three main areas, the most important being savings rate. I would optimize that again, get that really efficient. I would lock in nip in the bud housing, food, transport, and holidays.

And I wouldn’t sweat the small stuff as much old. I would live a little bit more if I could do it again, then I would concentrate on my income potential. Where am I skills going to earn me the most amount of money? And I would take more risks in this regard. Moving overseas to where my skills are in demand has been.

The best thing that I’ve ever done in my life is the last two years has been awesome. And I wish I did this when I was younger. I’m glad we did it, but I really wish if I’ve always five years younger still, we we’d go to another city or another country and we do it all again. But we’re just at the stage in life now where we want to settle down and start a family next year.

So it’s, you know, it’s a little different now, but. It really, I cannot say this. I can’t speak highly enough of getting off the Island, getting away from Australia and seeing the world exploring and using your talents in other countries. It’s just, it’s one of the best things I’ve done, highly, highly recommend.

And lastly, with investing, I would just take that really, really simple approach and do a. Ridiculously simple portfolio, something like VD HG or VAs plus VGs and I would just throw money. I would just throw money in it. So every I would automate it. I would automate it as much as possible. So when I save a set amount every single month and we try to do about $5,000 these days, that would just get thrown in there.

So whatever splits I’m running, I just automatically invest. And eventually over time that snowball grows to a ridiculous amount. And that’s really about it. Once I got those three components locked down, everything else works itself out.

Okay. That is it for 2020, the very last episode. I hope you guys enjoyed it.

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