Aussie Firebug

Financial Independence Retire Early

Before we get into the month of Jan, the annual anonymous FIRE Survey is back and open for submissions.

There was so much to improve on from last years survey (yes I did manage to add Super this time around 😅), better-structured questions and logic design flow were the main ones and I’m really excited to see what sort of analytics we can get out of this year’s dataset.

I did some homework on how many submissions we would need to achieve statistical significance. If we assume that there are 100,000 people pursuing FIRE in Australia (probably a lot less tbh), we need to have 1,056 submissions for this dataset to provide a 95% (industry standard) confidence level with a 3% margin of error of the community.

1,056 is the target gang 🎯!

It only takes 10 minutes to fill out and there have already been over 350 submissions so far 👏. A big thank-you in advance to everyone who participates 🙂


 

We’re back baby!

I can’t even tell you guys how good it felt getting off the plane in Adelaide and hearing that Aussie accent. For the first time in 2 years, I didn’t have to concentrate on my pronunciation of certain words and it was nice to get acknowledgment after an enthusiastic “Cheers Cobba” when the police officer helped us with our bags. You really don’t appreciate something until it’s gone but nothing beats the laid back, easy-going, always up for a laugh Australian attitude ♥!

First time I’ve ever been to Adelaide actually, and I would really like to go back because the city looked really nice! It killed us a few days/nights when the weather was a perfect 28 without a cloud in the sky and we were stuck in hotel quarantine. We stayed at The Playford Hotel in the CBD and we could see this killer little rooftop bar from our room and I did contemplate knotting together a few towels and trying to swing down for a beer or two…

I’ve gotta say, we didn’t have high expectations for what hotel quarantine would be like. You always hear the worst stories, and as I mentioned in the previous months’ update, we were part of the ‘Aussies in Quarantine Facebook’ group (lol) which constantly had nightmare stories about families getting stuck in a tiny 1-bed apartment, horrendous food and rooms where you couldn’t open the window (brutal). Well, you could imagine the surprise we got after reading all this negativity when we finally got to our loft apartment at The Playford. That’s right, our room had an upstairs loft, spa, Juliet balcony, king bed and 60 inch TV with every streaming service known to man available for us to use 😁. But that wasn’t even the best part… the in-house chef-prepared meals was the show stopper 🤤.

I’ve had room service before, but we were getting 3 chef-prepared meals a day delivered to our doorstep. We had to throw on the mask after 30 seconds and collect the little bundle of joy. It was honestly the best part, we were guaranteed a little hit of dopamine each time that little knock came. There was a menu on the TV so you knew what each meal was, but the surprise was half the fun. And the meals only started to repeat after around the 12th day. I’m talking 11 different types of breakfasts before it starting to repeat. Just epic!

Here are a few pics of the room and some of the meals so you can get an idea.

Our home for 2 weeks

View from the top

Bastard of a puzzle that took us 5 days

 

Our street was sectioned off like this. Pretty intense

Pesto pasta, pumpkin dip & cracker with an apple cinnamon muffin

Salmon with beetroot quinoa and choc fudge cake

Lasanga & Portuguese custard tarts

Hats off to The Playford and SA government for making a shitty situation as comfortable as humanly possible. Just like with most things, it’s only the bad stuff that makes the news, unfortunately. For every one that complained about conditions in quarantine, there were probably a thousand others who had more than ideal situations. It’s half the reason I don’t really watch the news anymore. It’s just story after story of the worst shit out there or giving a tiny minority of complainers a platform to spew garbage.

The first week of quarantine was actually enjoyable you know. Plenty of free time to relax and just wind down after all the flying and travelling we had been doing in the previous months. And you don’t feel guilty about not going out and enjoying the day. The staircase was a lifesaver for exercising because it opened up the walking path and made it easier to rack up the kilometres instead of cutting circles in one room. It also doubled as a little pull up bar from underneath which was very handy. After the first week though, things started to get a bit flat and we were more than ready to leave on the 14th day.

We tasted freedom on the 19th of January and left the Playford at the crack of dawn to board our flight back to our home state, Victoria!

We’re from Gippsland in Victoria which is south-east of Melbourne and even though I’ve done the trip from Tullamarine to Latrobe Valley a hundred times, I don’t think I’ve ever felt better seeing the ‘Next Exit’ sign on the M1 with our home town’s name.

The first week back was full on! We had friends and family that we hadn’t seen in over 2 years, nieces and nephews we were meeting for the first time plus trying to sort out our living situations all made for a hectic return in the best possible way. Mrs. FB had to return to work at the end of January which added even more pressure to get everything done as quickly as possible.

We’ve decided to buy a home this year. Not an investment property, but a home that we can raise a family in for potentially the next 10-15 years. I’ve crunched the numbers and compared rental prices for similar houses and believe it or not, it’s very similar (cost-wise) to have a mortgage instead of renting atm because of how low-interest rates are.

These were my rough calcs for a ~$500K house in my town.

Renting
Rent (yearly) $27,040
Bills (yearly) $2,400
TOTAL (yearly)  $29,400

 

PPOR (Primary Place of Residency   Notes
Principal (yearly) $16,008 Assuming a 2% interest rate over 25 years with a 20% downpayment ($400K loan)
Interest (yearly) $7,968 This number will change slightly each year but it’s roughly this much
Bills (yearly) $2,400
Rates (yearly) $2,500
Water (yearly) $900
Repair & Maintenance (yearly) $4,000 Guesstimating this one
TOTAL (yearly) $34,576

I haven’t factored in stamp duty (such a bad tax) and a few other bits and bobs but the numbers are so much better for home ownership vs renting compared to a few years ago. I’ve spoken about opportunity costs before and sinking a lot of your capital into a non-income producing asset (a PPOR) can delay your journey towards financial independence but we’re at the stage of our lives now where stability and other intangible factors are taking priority vs what’s going to make the most financial sense.

Even this quick and dirty example above makes for a very compelling (numbers-wise) case for homeownership in the current environment. If we wanted to rent a property valued at around $500K, it would roughly be $30K a year. We would never see this money again. Homeownership would still take more money out of our pockets each year (~$35K), plus the stamp duty and buying fees, but a lot of that money would be retained through equity. Whatever we pay in interest will be gone, never to be seen again. But the principal payments act as a sort of savings mechanism which makes it a lot more palatable.

I’ve got a few projects in the pipelines as to what I’m going to be doing work-wise this year. Nothing has materialised yet but I should be able to provide some updates in next month’s article. I might even do a dedicated post about it.

Net Worth Update

Getting dangerously close to the $900K mark now 😁

The big bump this month came from a mistake I made when I signed up for a fixed contract with the last company I worked for in London. Like a rookie, I didn’t opt-out of the UK pension for that job 🤦‍♂️. So I was receiving pension payments (equivalent to Super payments for us Aussies) each paycheck for the last 6 months. And now that money is stuck in the UK until I turn 60 🤦‍♂️🤦‍♂️🤦‍♂️

If anyone knows how to either

  1. Get the money transferred to my Australian Super account
  2. Get the money transferred to my Australian bank account (the better option)

I would be very grateful if you could share the details.

I rang up the mob where my UK pension was being locked away and they have told me that I can transfer it to my Aussie Superfund once I turn 60 or if I have health issues.

So basically, I discovered this little locked treasure too late and it turns out I have ~$12K AUD stuck there. What I should have done was opted out of the pension scheme which would have resulted in more money outside my pension account… I would have paid more in tax of course but we are planning to reach financial independence long before our preservation age so I’m happy to pay a bit extra.

Anyway, this $12K bump was added to the old net worth along with ~$20K from the share market and a little bit of cash and Super to round off an excellent jump to start the year.

Properties

Boy oh boy how things can change in a year.

So as I mentioned above, we’re currently in the market for a home in our little country town of about 20,000 people that’s 2 hours away from Melbourne with one of the main economic drivers of the area being coal-powered power stations that are shutting down over the next 20 or so years… you know, not the most sought after real estate in the world I would have thought.

Well, well, well… let me tell ya. My town (and surrounding towns for that matter) are experiencing the hottest market that people can remember… ever.

Most houses between $400K-$600K are not even going to market. They are selling before they hit the internet and one agent told me he has a waiting list of 20 cashed-up buyers ready to pull the trigger. I understand agents can add a little mayo sometimes but in this market, I don’t think they are exaggerating 😑.

I have been looking at homes since the start of last year and I know what similar types of houses were selling for then and what they are being sold for now. I reckon real estate has jumped at least 20% within the last 12 months in my home town.

And it’s not just here either. I have been receiving a few pamphlets from real estate agents up in Queensland (where we have our remaining two investment properties) asking me if I’m looking to sell. If you’re a regular reader of these updates you may have remembered me talking about selling one of the Queensland properties in August last year. I had a few appraisals done and wasn’t exactly blown away so I thought we’d sit of them for a bit longer. Well, the new appraisals have come in and the market up there must be really picking up as well because the ballpark estimates that I’ve been receiving have been very good IMO and I’m probably going to offload one property this financial year if everything works out.

It’s pretty insane that this has happened, right? Who could have predicted that house prices around the country it seems, would have gone through the roof during a global pandemic 🤯???

I’m no fortunate teller, but I really don’t see house prices going down anytime soon. The market can definitely slump, and stagnate over many years. But the major factor for a big crash comes down to interest rates IMO. Because if people aren’t forced to sell, they won’t!

Even if house prices do slump, there’s almost an unbreakable psychological law in Australian real estate to never, ever, ever sell for less then you bought it for. Even if it takes you 20 years, ignoring inflation, ignoring buying and selling costs, ignoring opportunity costs… it’s simply unthinkable to sell your house for less than what you paid for it.

And the only thing that will ever force people to sell for a loss is if they can’t meet serviceability which brings us back to interest rates.

So whilst it does suck to try and find a house in this market, as long as we find the right house, I’m not too worried about paying a bit extra because I really can’t see house prices coming down that much (if at all). The biggest issue we’re facing atm is stock on the market. I’m hoping that when job keeper ends at the end of March and when the COVID tenant protection laws finish, there will be a lot of people listing their homes to capitalise on this hot market. I don’t expect a price drop (it would be nice), I’m just hoping for more options to choose from because at the moment we can’t even go to an inspection without the house already being under offer 😩.

I’d love to know how the local markets are where you guys live in the comment section below 🙂

 

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

A solid month with some great dividends in January 💰

As I’ve mentioned in previous months, we have put a halt to buying shares for the time being with all our savings going into the house deposit when we find the right one. So the portfolio will continue to tick along at the current splits for the time being. Once we have our house, it will be back at it again!

 

Networth

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