Aussie Firebug

Financial Independence Retire Early

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

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

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

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

Temple at Angkor Wat, Cambodia

Ha Long Bay, Vietnam

Paradise cave, Vietnam

Hải Vân Pass, Vietnam

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

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

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

Why?

Because it only cost us $45 AUD a night.

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

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

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

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

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

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

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

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

Net Worth Update

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

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

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

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

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

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

Properties

No changes in the properties this month.

Property 1 was sold in August 2018

 

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

ETFs/LICs

 

 

 

 

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

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

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

 

Networth

 

JAN19 Net Worth $621,955 (+$21,341)

JAN19 Net Worth $621,955 (+$21,341)

If you don’t already know by now, we jetted off on our overseas adventure in mid-Jan to begin a new chapter of our lives working and living in the UK.

You can read about the decision and ‘why’ in last months post ‘You Only Live Once’.

I’ve had so many people reach out to me with amazing stories about their travels when they were younger and how it’s one of the best things they’ve ever done. We left in the middle of Jan and have been trecking through South East Asia for the last 3 weeks stopping by Singapore, Malaysia and Thailand.

And before you ask, no this is not becoming a travel blog 😂 I just couldn’t resist showing off some of our photos.

A cat cafe in Thailand

There are a few things that stick out like a sore thumb when you visit SE Asia. With the exception of Singapore, everywhere has been so incredibly cheap! It’s mostly a reflection of how much taxes we pay in Australia, but drinks and smokes (some of our most taxed items and for good reason) are literally 10% of the price in SE Asia. I mean, even at a swim-up bar where you’d probably be paying $10 for a stubbie in Oz, you could get an ice cold long neck for around $2.

Food and accommodation are also insanely cheap and most of the time it’s really healthy and fresh. Half the reason we went to SE Asia was because of the food. Our favourite place has been Thailand for food (legit have ordered a Pad Thai every meal for around $2.5).

Everything here combined was around $10 AUD

We have been mostly staying at backpackers for around $20-$30 a night (which was cheaper than our rent back home lol) but occasionally we splash out for a ‘luxurious’ night in a fancy place for around $100!

Hostels are such great places to meet people from all over the world. Whenever we say we’re from Australia, one of the most common themes from other travellers is how expensive Australia is to them. It is one of the most expensive places to live in the world! But the advantage that we as Australians have is that we can move and travel to cheaper countries if we chose to do so. Someone growing up and earning a normal wage in Malaysia would almost find it impossible to have a holiday in Australia because of the difference in purchasing power.

We off to Cambodia and Vietnam during Feb and then a stopover in Dubai before starting work in the UK mid-March.

As a result of this travelling, I haven’t had the time to respond to all your emails. So if you’re waiting for your question to be answered, please be patient. I will get around to every last one eventually!

 

Net Worth Update

Great start to 2019 with a big bump of over $20k!

The sharemarket bounced back from what was a turbulent December. This looks good in theory, but during the accumulation phase of FIRE. We actually want the sharemarket to not go up at all, in fact, it would be better for it to head south whilst we are gathering units are of favourite ETFs and LICs.

Nevertheless, shares and Super (ours are mainly in shares anyway) really beefed up the gains for January and added around $14K into the portfolio.

The other bump from cash was a nice surprise. I’m currently using my annual leave which benefits from leave loading. In a nutshell, I’ll be earning more each fortnight until the start of March which is when my annual leave runs out and I’ll switch over to long service leave at half pay until July. It’s pretty insane that I have long service leave already built up when I’m not even 30 yet. I don’t feel old enough to have it but I’ll sure as hell take it 😁

Mrs. FB got her last paycheck last week (teacher) and won’t get paid again until she finds a job in the UK.

Just because we’re on holidays doesn’t mean we aren’t tracking our expenses too. And would you believe that travelling around SE Asia has, in fact, cost us roughly the same as living back home for the last 3 weeks 😲

And we have been living our best life too, even doing a few expensive things (night safari in Singapore, river tour etc). I met a dude who was from Amsterdam (a student) and he had been living on this tropical island in Malaysia for the last month without dipping into his savings at all! He works at a local coffee house as a barista and gets a free bed plus a bit of money which he can stretch to live on! He only works like 5 hours a day too.

Insane.

Properties

No changes in the properties this month.

Property 1 was sold in August 2018

 

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

ETFs/LICs

JAN19NW

 

 

 

We have a new addition to the portfolio this month…

Australian Foundation Investment Company (ticker AFI) has joined the fold. It’s a LIC that forms part of our strategy 3.

It was trading at a discount so we pulled the trigger. I have to say though, I have been thinking more and more about Labor’s franking credit refund plan as of late and it’s hard to not factor that into the equation when we are buying LICs.

Also, the FI Explorer wrote an extremely well written and researched article about A Skeptical View of Listed Investment Company Investing which I encourage anyone who is considering investing in LICs to read. It’s important to hear both sides of the story and have a well-balanced view on an investment before you put down your hard earnt dollars.

I’m not going to refute the article in this post (I pretty much agree with everything that was written) but will say for anyone wondering, my view is and has always been as part of strategy 3, I’m willing to accept a lower return and diversification in exchange for a more dividend focussed portfolio.

LICs have a ‘focus’ on dividends which I like. I don’t feel easy that there is a human making the investment decisions which is why I split my management risk over two LICs and only buy when on discount. I have also modified my strategy to ensure that I’m never weighted too heavily in LICs with a good portion of the portfolio being in ETFs (currently a 17% to 83% split).

At the end of the day, no one knows if LICs will outperform ETFs or the other way around. I dabble in both and think they are both suited for anyone looking to reach FIRE in Australia.

One thing I think we can all agree on though is the quality of content within the Australian FIRE scene continues to reach new highs. FI Explorer’s article, whether you agree with it or not, was one of the most thoroughly researched with sources to back up his claims articles I’ve read! This only strengthens the movement and welcomes healthy discussion.

 

Networth

 

DEC18 Net Worth $600,614 (+$34,175)

DEC18 Net Worth $600,614 (+$34,175)

I cannot believe 2018 has come and gone. What an incredible year it’s been!

We spent Christmas locally and thankfully Mrs.AF is from the same town as me along with all her fam so there was no traveling 🙏. We used to travel to Melb a lot on Christmas day to see my sisters and driving around can be a drag.

Christmas time is always awesome because a lot of my old mates that are living in Melbourne come down to be with their families which means I usually see them out and about. It’s great to catch up as everyone has such busy lives these days.

I remember last year that me and a few mates kept saying we should do a trip together and we just need to organise something. Well, Mrs.FB and I booked a trip for NYE in January 2018 because nothing ever happens unless someone pulls their wallet out and organizes shit.

I’d almost forgot that we had that trip coming up so it was nice to be reminded about it at the start of Dec and the whole group was pretty pumped.

We bought in NYE in Mornington Peninsula which was awesome!

So incredibly busy though. You’d hate to be a local when the tourist come and invade your town haha.

Big, big plans for 2019 which I’ll write about in another post but can’t really complain about the last 12 months.

The net worth has risen to heights that I didn’t think was possible at the start of the year and it’s only getting better.

 

Net Worth Update

Finished off 2018 at $600K 😁😁😁

The properties were the real heavy lifter this year and I was very lucky with IP1 and the re-vals for IP2 and 3 (more on that below).

I couldn’t be any more stoked to finish the year at this number. We’re getting into some serious territory now. I always thought that once we hit around $700K. The last $300K will come really quick because of dat compound interest baby.

We still have a lot of our net worth in cash. But I’m super pump to slowing drip feed it into the markets and see our passive income rise accordingly!

 

Properties

Property was the real MVP this month. I have mentioned in previous posts, but we have swapped lenders (from CBA to Macquarie) to get a better rate and to switch to P&I since the gap between I/O is at a comedic level now. It’s almost… cheaper (payment wise per month) to go P&I.

Insane

Because of the switch, Macquarie revalued the two properties and they came back higher than what Commbank thought they were… Which was no surprise to me really, I had suspected that CBA had put a halt on higher valuations for a while whilst they dealt with the whole royal commission thing.

This valuation saved what would have been a very red month.

 

Property 1 was sold in August 2018

 

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

ETFs/LICs

Dec18SS

 

 

Put your hand up if at some point, you thought we were heading for another GFC during December?

🙋‍♂️

The shares portfolio got rocked in December, some weeks we were down $10K+ grand and it looked like it wasn’t slowing down.

This might scare the n00b investor, but we understand that whilst you’re in the accumulation phase (still working and building our snowball). We welcome a GFC like event! It helps us collect more units than you otherwise would each time we buy, and it’s all about the amount you own,
not how much it’s worth.

More units = more income
More income = closer to FIRE

Don’t get me wrong, it is nice to have a quick gander every once in a while and see you’ve made more money in the markets than you might have at your full-time job. But this boost of dopamine that makes you feel good is a false win. Because if the prices rise, next time you go to buy your favorite
ETF/LIC, your money will net you a smaller piece of the pie and ultimately, a smaller income stream in the long run.

I was getting really excited at the thought of a huge crash because as some of you may have read, we are currently cashed up from the sale of IP1. Not only are we still in the accumulation phase, but we also have a big chunk of capital to invest over the next 18 months. I was starting to get itchy with all the prices dropping and at one point was considering investing half our cash holdings.

But as I type this today (mid-Jan), the markets have recovered somewhat so we shall continue with DCA over the next 18 months.

Networth

 

NOV18 Net Worth $566,439 (+$7,080)

NOV18 Net Worth $566,439 (+$7,080)

It wasn’t too long ago that I wrote about starting a new job because my old one went through a ‘restructure’ back in 2016 and essentially screwed over the team I was apart of.

You can read about that here.

Long story short, I took a $12k pay cut back in 2017 to get out of that environment and move closer to home.

Fast forward 18 months and four out of the six original team members have left that employer (myself being the second to get out of dodge). But more importantly, I managed to climbs the ranks during the last 18 months and have just accepted a new job that pays around $15k more than my old job!

So not only have I managed to get back the loss in pay, but I’m in a better position (income wise) then I was 18 months ago plus it’s only a 10-minute drive from home!

Milhouse

Everything’s coming up Milhouse right… not quite

Yes, it’s more money.

Yes, it’s the job I’ve wanted for a while.

Yes, I feel more important with the added responsibilities… but I can’t help but feel it’s not worth it.

Let me explain.

The new position is in management. It’s something I’ve wanted from a career standpoint for a while. I don’t know about you, but when I discovered FIRE, building a long career as a corporate drone sort of went out the windows and I stopped giving AF about climbing the corporate ladder.

But I have a competitive streak in me that won’t quit. Even though I know I’m not going to be at this job for many more years I just can’t sit back and not give it a crack. Part of me wanted to prove something to my other employer like

‘Hey, check it out. I left you guys 18 months ago and now I’m the manager here getting paid more 🖕’.

So I’ve been acting in the job for around 3 months now (officially got it last month) and it’s so bizarre what I’m willing to give up just for some extra cash and an ego-boosting title. My old job was basically stress-free and I left on time nearly every day. That has now significantly changed. So much more stress and a lot of unpaid hours after work to get stuff done.

I don’t think I’m the only manager with these issues. It seems to be the norm for all the managers and above. The big wigs at the top of the food chain routinely stay back until 7:30 pm – 8:00 pm and might even come in on weekends.

Fuck. That.

I supposed I could have knocked back the job, but I wanted the challenge, extra $$$ and the self-satisfaction knowing that I at least reached this level before I hang up the tie in the corporate world.

I’ve lost on average around 1.5 hours of free time each work day I reckon. This just strengthens my desire to reach financial independence so I can get back more hours in the week. If you’re forever increasing your consumption, you’re going to be chasing more income at the expensive of your life. What do you want? Your money, or your life?

I actually really enjoy the job but it’s a lot more stressful and time-consuming (and now I know why managers get paid more). It should get better as I become more efficient in it.

 

Net Worth Update

Shares had another bad month. I keep waiting for this GFC 2.0 every keeps talking about. Still sticking to the plan of putting in $15k into ETFs/LICs each month.

We had a decent month in terms of savings which was surprising considering Chrismas is just around the corner and we have been buying presents.

Properties

No changes in the properties this month.

 

Property 1 was sold in August 2018

 

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

ETFs/LICs

Nov18NW

And the onslaught continues… which is actually fantastic am I right? Everything on sale!!!

Because we have so much cash at the moment from the sale of IP1, we are praying for a big crash so we can swoop in.

We bought $15k worth of A200 even though Milton was trading at a discount. This would seem like I’m deviating from Strategy 3.

BUT! After some more research, it would appear that A200 had dropped even further (in percentage terms) than both MLT and AFI. There’s a whole debate on why ETFs can drop more than LICs in a correction but long story short, I decided that A200 was on a bigger sale than MLT and AFI so I went with that 😁

Networth

 

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

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

Oh baby!

BIG bump this month after we sold Investment Property 1.

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

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

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

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

BartTinFoilHat

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

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

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

But still…Undervaluing by $100K? Really?

 

Net Worth Update

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

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

Our cash holdings are currently $218K 😱

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

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

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

Properties

IP1 has officially been sold! Wooohoo 🎉

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

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

I might just leave the following

 

Property 1 was sold in August 2018

 

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

ETFs/LICs

Oct18NW

Our shares had a terrible month 😭

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

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

 

Networth

 

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

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

A new player has joined the game!

WelcomeMilton

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

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

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

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

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

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

GFC2.0 Nope

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

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

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

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

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

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

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

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

Net Worth Update

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

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

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

Properties

 

No changes in the properties this month.

 

 

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

ETFs/LICs

sep18NW

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

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

 

Networth

 

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