I share these net worth updates to stay accountable, seek feedback on our strategy, and prove that achieving financial independence in Australia is feasible without relying on extraordinary luck or wealth. The table below tracks our journey from $36K in debt to reaching our goals. 🔥
It finally happened…
Monthly passive income vs expenses
October was the first month in AFB history where our passive monthly income, calculated using the four percent rule, exceeded our monthly expenses.
It was a particularly low-cost month and the FIRE portfolio had a significant boost, which I’ll get to shortly.
But still… for the first time, the red line has edged just above the blue.
So what does this mean?
Honestly, not a lot.
It’s a financial/Excel milestone, and one my wife and I have been working towards since 2013. But in terms of day-to-day life, nothing really changes.
It’s still worth acknowledging because it reflects fifteen years of disciplined saving and investing a significant portion of both our incomes. Our FIRE portfolio now sits at just over $1.35 million, and that figure doesn’t include our super or home equity. It’s simply the assets we can access today to fund an early retirement.
One thing I need to clarify, even though I spell it out in every net worth update, is that we don’t receive our passive income in tidy monthly instalments like the FIRE progress chart might suggest.
The passive income figure is based on the four percent rule and then divided by twelve to create a monthly estimate.
In reality, we only receive five chunks of passive income each year. Four come from dividend payments and the fifth comes through our tax return, which is when our franking credits are refunded.
The four percent rule also assumes capital gains and expects you to gradually sell down your share portfolio to generate the income. We aren’t selling anything at this stage.
So the line chart shows the theoretical passive income our FIRE portfolio could produce, not the actual income flow we receive.
A big reason why we don’t sell down shares is that I’m still generating an income outside of investing, so there’s currently no need.
So what does this mean for these updates now that we’ve temporarily hit this milestone?
I’ve got an article coming out in November that outlines my plans from here and what’s next for AFB.
Stay tuned.
Net Worth Update
It was a strong month for every asset class except BTC, although the real driver once again was the business.
We’ve just signed another reasonably large contract and with more in the pipeline, 2026 is shaping up to be a massive year.
I started this company in 2022 because I wanted to build something interesting and work on challenging problems with great people.
At the time, I only had one small contract that covered about 25 percent of my old salary.
Financially, it was a big risk to step out on my own with no guarantees.
No sick leave, annual leave, super, long service leave or workers’ compensation.
The one thing I did have was our FIRE portfolio. Back then, it covered roughly 70 percent of our living costs.
That gave me the confidence to take the leap, knowing my wife and I had a buffer that would support the family even if the business didn’t work out.
After four years of paying myself next to nothing and reinvesting in tools, people and equipment, I’m finally starting to see revenue reach the level I used to dream about.
It has been a lot of fun building this business, but I honestly struggle to see how I could have made it work without the financial support from the portfolio, especially while raising a young family.
If you’re thinking about starting a business, my advice is to do it before you have kids if you can. It’s far less stressful, and you won’t feel the financial pressure as much as you would while supporting a family.
.
*Expenses include everything we spend money on to maintain our lifestyle. We do not include paying down our PPoR loan as an expense, only the interest
*Investment income is simply 4% of our FIRE portfolio divided by 12
It’s a little tricky to see on the chart, but our expenses for the month came in at $4,403 and our passive income landed at $4,419.
So we cleared the line by twelve dollars. Woohoo!
Shares
The above graph was created by Sharesight
We didn’t buy any shares this month.
Networth
Nice work AFB! Just wondering how you account for the potential tax liabilities for the business? Will you just assume the hit when it’s due assuming the PAYG isn’t taking into account the varied amount.
Yeah, pretty much. I just put aside a portion of the money ahead of tax time.
Well done! Wondering how the dividends stack up against the (untaken) 4%?
I know with dividends it’s more of a moveable feast, but are you comfortable sharing what those have looked like over the past couple of years?
Sure Jane.
This is what our breakdown has looked like over the past three years.
22/23
Dividends: $44K (6.22%)
Total Return: $128K (17.89%)
23/24
Dividends: $31K (4.21%)
Total Return: $137K (17.79%)
24/25
Dividends: $28K (3.15%)
Total Return: $155K (16.77%)
Notes:
This includes our shares and BTC, which does not pay a dividend.
I have not factored in the interest we earn on our cash, which is roughly 4 percent.
As you can see, our returns for the last three years have been much higher than the 4 percent rule. I have still used the rule because it is the benchmark most people follow, and the recent bull run has boosted results. I am not expecting future returns to remain this high.
I hope that helps.
Cheers
Hi. I know your not concerned with superannuation at the moment, Just curious what assets you invest in inside your super.
Not exactly sure the 4% rule, and passive income are the same thing…. passive income is interest, rent and dividend. Were as the 4% rule is a withdrawal strategy….
Why does your PPOR never increase in value? Wouldn’t you adjust it annually at least?
It does increase. Check out our update in June. Big re-val update there.
An amazing result, congrats and also on getting MMM for your podcast! It must have been a slog but it’s just wonderful to see those years of steady persistence pay off.
Hey mate, I’m 33 years old and our household net worth is very similar but I have much less in shares and more in IP/PPOR (haven’t revalued our places since we bought them) and super. Your gains from your business is massive (well done!) so I don’t think we’ll have similar net worth in the future!
We’ve recently started investing more in index funds ourselves to have a more balanced portfolio although ours is weighted towards VEU and VTS. The quick maths for us says we can probably retire at earliest in 10 years, but more likely 15 years.
Is your super number including your spouses? I’m curious to know if you plan to invest more into your super? My wife and I have about double what you have and I wonder if we’re putting too much into our super.
Super is my wife and I combined. We will probably contribute more as we get closer to preservation age. We value the flexibility and freedom of having money available now compared with the tax savings. Everyone’s situation is different though.
Hi Matt, are you considering adding to your BTC holding during this current pullback?
Do you boost your Super account while actively investing in ETFs?
Congratulations Matt!
Even that is an “Excel milestone”, it’s great to see the crossover point!
Hey Matt, definitely a cause for celebration! You can share a McDonalds meal with your Mrs using these extra $12!
Goodbye AFB. Just listen to your last podcast. You are the role model to me on the FIRE path. Thank you. You did an amazing job.