1st Quarter 2021 Update

2021 has been a great year so far, except for the 5 day snap lockdown in February. We have had plenty of nice warm weather for beach and parks. We have just got back from a 2 night anniversary (kid-free) holiday to Margaret River.

Sunset at Surfers Point, Margaret River

We do have some extra retail spending, we bought our first couch and dining table $-4,650. Not bad if averaged out, considering we have had a free second hand couch and dining table for the last 12 years!

1st Quarter Income/Expense:

Income: $35,931

Expenses: $25,127

Savings rate 30%

Q1 Breakdown:

Home Loan Balance:

Balance: $150,091

Amount paid down in Q1: $17,739

Travel: $1,195

2 nights accommodation at Margaret River Beach Resort. Pre paid for 9 night accomodation in Kalbarri for August.

Along the Cape to Cape walk, Margaret River

Goal Update:

Grocery are still a bit higher then we will like but not totally out of control. Continued focus on trying minimise extra trips to shops will help as we are doing quiet well with meal planning for the bulk of the main shop per week.

Savings rate was 30% which was surprising considering the large purchase of couches and dining table. Hopefully, going forward we will have minimal retail expenses and can bump that savings rate up a little!

With low interest rate and extra payments, we continued paying down the mortgage by $17,739 this year. At this rate we will smash our target goal of $50,000 paid down for the year.

Overview:

Even with the big couch and dining table purchases, we are going well towards our goals and the end of the home loan is in sight. It wasn’t that long ago that we were paying $900/month interest on the loan, now it is around $360/month!

We haven’t got much planned for the next quarter, the kids birthdays but apart from that we will just keep chipping away before a family holiday up to Kalbarri, Western Australia in August.

Next update, we will look at our Superannuation and update the home loan repayment timeline.

Long Term Family Travel Planning

Spain

In a few years time once the home loan is paid off (2024), we plan to travel long term every two years as a family of 5.

The plan for long term travel is minimum stays of 30 days in an apartment with cooking facilities to reduce costs.

We will aim for between 1 and 3 months trips, off peak March-May and September-November.

New Zealand

It’s not going to be cheap to travel around the world with a family of 5! To offset the costs of the trips, we will build up a travel fund of around $9,000-$10,000/year for $18,000-$20,000 a trip. In 2024, we would have no daycare fees and no home loan payment, our savings rate should be 50% so this won’t derail our financial future.

I should still be paid whilst we are away as I have significant annual leave (accrue 5 weeks/year) currently have 8 weeks available and long service leave (1.6 weeks/year) currently have 16 weeks available. Total 24 weeks leave available, accruing 6.3 weeks/year.

If I was to use 12 weeks every two years and 3 weeks in the year in-between, I would have enough leave to last up until the kids finish school!

Mexico

We should get around 5 or 6 long term family travel trips in before the kids finish school. I believe the experiences these trips will have on them will outweigh any missed schooling due to travel.

After the 5 or 6 big trips and the kids have finished school, we should be Financially Independent. Which means once we have set our kids up in their own lives we can continue to travel long term perhaps even years at a time without the need of a paycheque.

Budapest

I will go into more details of trip planning for individual trips in the future.

Lists of possible long term family travel locations:

  • Spain – Almuñecar, Granada, València,
  • Portugal – Lisbon, Lagos
  • New Zealand
  • South East Asia – Penang, Ko Samui, Vietnam, Chang Mai
  • Mexico – Mexico City, Tulum
  • Poland – Krakow,
  • Slovenia – Podkoren, Zagreb
  • Hungary – Budapest
  • Slovakia – Bratislava
  • Czechia – Brno
  • Scotland – Edinburgh, highlands
  • Ireland – Dublin, countryside
  • Canadian Rockies – Canmore
  • Columbia
  • Costa Rica
  • Panama
  • Peru
  • Chile

It’s a endless list but something we will continue to add over time. Thanks

Annual Spending & FI Number

First 12 years of my adult life!..

I have been tracking our expenses for just under 3 years. This has been a key tool in fixing our financial outlook.

Using our annual spending and estimating future years we can work out our financial independence number.

This is all speculations and a bit of fun, we will have to wait to see what our actual spending and real returns are.

Annual Spending:

2019 – $61,553

2020 – $77,555

I expect to have our home loan repaid by 2024 so we can remove loan repayments.

Minus Home Loan Repayments:

2019 – $40,075

2020 – $54,077

In 2024 our youngest kids, the twins will start pre-primary. This will hopefully remove childcare fees, which we are paying for three kids in 2020.

Minus Childcare fees:

2019 – $40,075

2020 – $38,607

Looking ahead, our annual spending seems to be around $40,000 per year. Adding a buffer to allow for some extra one off costs, such as car purchases and extra travel, we will be around $50,000/year.

$50,000 would require $1.25m portfolio based on the “4% rule”. Personally I prefer a larger buffer and will use 3% at this time.

$50,000/year at 3% = $1,650,000 portfolio.

As of January 2021 our combined net worth is $214,805. We would need an additional $1,435,195!

Compound Interest Calc!

Starting in year 2024, with the home loan paid off, childcare fees gone and superannuation grown over the last 3 years to around $312,464.

$20,000/year Superannuation.

$23,478/year previous home loan repayments which is now savings

$32,404/year Savings

=$75,816/year ($2,916/fortnight) invested for 11 years is $1,649,806. (5% interest)

MoneySmart compound interest calculator

The year would be 2035, I would be 46 years old and my wife would be 44. Our kids would be 18 and 16.

It will clearly come down to market returns in those last few years but as a rough guide.

By the time our kids finish school and start living their own lives, we should be free of the 9-5 requirement of work and be able to follow anything of interest, regardless off monetary gain.

I find it hard to imagine us both not working in some capacity over the next 30+ years, but not having the worry about making ends meet will be a satisfying feeling.

Also once the kids have moved out of home, the idea of being a global nomad and just long term travelling the world is extremely appealing!

Slow – travel life!

Thanks! Hope you enjoyed our little number crunching!

4th Quarter 2020

END OF 2020! Wow we have had a interesting and quick year with Christmas been and gone!

It doesn’t feel that long ago in autumn, we were having a virtual Mickey Mouse party for our daughter’s 3rd birthday while in lockdown!

Now we are enjoying our freedom in Western Australian summer

Time to update the progress.

4th Quarter Income/Expenses

Income: $31,042

Expenses: $20,751

Savings rate: 33%

2020 Income/Expenses:

Income: $128,740

Expenses: $77,555

Savings rate: 39.74%

Q4 Expenses Breakdown:

2020 Expenses Breakdown:

Home Loan Balance:

Balance: $-167,830

Q4: $14,871

2020: $55,189

Travel: $430

In November, we went for one week to Esperance, Western Australia. Our holiday home cost us $430/week including all other expenses (grocery, entertainment, dining out, fuel) it equaled $1,133 or $189/day for 6 days family of 5.

Goals Update:

This year we hit our highest savings rates, when childcare was free amid the early months of the COVID-19. In June we hit 61%, since then our saving rate has reduced back down to a average 39.74% for 2020.

Our average grocery budget is still a ongoing goal, to try and keep the extra trips to a minimum with average weekly shop at $150/week.

The 3 months of free childcare helped us fly past the target of $45,000 paid off the home loan ($178,230), to end up paying $55,189 off ($167,830).

Next year we are aiming for $45,000 paid off again ($122,830) but with a stretch goal of $50,000 paid off by end of 2021 ($117,830). We will have the tax rate cuts from November and reduced interest rates helping us (currently 2.94%).

Overview:

Financially speaking, we have come out of 2020 a lot stronger then we started. There was a point amid the chaos of the early COVID-19 days when I was doing some math’s to see how long we could last if we ended up job-less. This didn’t turn out to be true and with extra savings thru the year we made some great progress.

Looking to the years ahead we start to home loan balance coming to a end, this will then start our investing journey outside of superannuation.

There is a feeling of missed opportunity: focusing on paying down the home loan in a low interest rate environment, with the bull runs of US and Australian stocks. But the future is unknown and I feel the security of locking in lower monthly expenses will come in handy in the decades to come.

Thanks for reading,

Esperance, Western Australia – November 2020

In November, we went for a one week holiday to Esperance, Western Australia. It has been almost one year since our last family holiday and was a lot easier now that the twins are a bit older.

The COVID-19 border restrictions preventing us from leaving our state but this hasn’t affected us because we aren’t prepared to try flying to eastern states or overseas with the three kids yet! 😆 In fact I think it has been a positive, lots of West Australians are exploring their own state instead of heading to South East Asia or the Eastern States.

We booked a 3 bedroom holiday house thru my worker’s institute for $430/week.

In the mornings with no wind, we headed to the beach after a quick stop at Coffee Cat for iced coffees.

By the afternoon, we headed out to play at the local playgrounds.

We also snuck a trip into a animal park for the kids too.

We utilized the kitchen for all breakfasts, most lunches and about half of our dinners.

It was a good but short trip, for the amount of driving required to get there (700km each way!). Next time we go to Esperance, we will take our time and go for two weeks.

Expenses:

Grocery: $203.89

Entertain: $52

Dining: $258.55

Car: $188.28

Accommodation: $430

Total: $1132.72

$189/day for 6 days family of 5.

3rd Quarter 2020 Update

Things are going well in the FMT household, the weather is slowly starting to clear up and we are having more”Spring days”, so we can all get outside and enjoy it!

This quarter we had some extra income from tax refunds, I didn’t work any overtime shifts and we had our first little 1 night getaway without the kids since the twins were born.

Time to update the progress.

3rd Quarter Income/Expenses

Income: $35,721

Expenses: $24,163

Savings Rate: 32%

2020 Income/Expenses

Income: $97,697

Expenses: $56,803

Savings Rate: 42%

Q3 Expenses Breakdown:

Home Loan Balance:

Balance: $182,701

Q3: $15,229

2020: $40,318

Travel:

$165.77

One night hotel getaway to Fremantle without the kids. Exploring Fremantle Prison, markets, going out for dinner.

Goal Update:

It looks like we will easily beat the end of year goal of $47,000 paid off home loan($178,023) as we only have $4,678 to go!

Overview:

Daycare fees are back! 3 kids in daycare has really taken a good chunk of our income. This was to be expected, the free daycare over the last few months was too good to last.

Savings rate dropped to 32%, only just above our minimum savings target of 30%.

Home loan repayments going well, should easily beat $178,023 goal set at start of year!

Looking forward to a family holiday in Esperance next month and Christmas which is almost around the corner.

See you in the next quarterly update in 2021!

Thanks

Our Superannuation Plan

This is clearly not financial advise, it is just observations and ideas I personally have. Please seek professional financial advise.

Superannuation is large blindspot alot of people in Australia have, they all have a super account but most couldn’t tell you how it is diversified or what the management fees are.

I very much fell into that category, signing up the the recommenced super fund from my employer.It was a actively managed fund with a 2.5% management fee and performance fees aswell.

Last few years we have been in a good 70% stocks to 30% fixed interest index super fund with a 0.25% management fee.

Previous Super Fund, 70/30 Stocks to Fixed Income

We recently changed to 100% stocks to maximize growth over the next 30-35 years.

Our new superannuation fund costs are-

Admin fee $1.50 week plus 0.1%

50% Australian Shares – Index 0.09%

50% International Shares – Index (unhedged) 0.09% + 0.01% indirect cost

Total Fee 0.195% plus $1.50 week

Salary Sacrifice-

Over the last couple of years, I have been putting each pay rise into super, hoping to get towards the $25,000 cap next year.

The chance to get 22% extra money and letting it compound over the next 30+ years was too good to miss. If only I had started sooner!

Government Extra Contributions-

Low income earners like Mrs FMT maybe eligible for co-contribution payments from the government. Currently we put a one off $1000 into her super per year and the government matches with $500.

There are a few other options like Spouse Tax Offset, we may look into in the future.

I will also look into contribution splitting with my employer in the future as my super fund is about 76% of our total super net worth.

Superannuation role in part of FIRE plans-

Originally I saw super as a bonus after reaching FI but I now view it as a tax advantaged bucket which can help optimism our investments.

I view all our investments wholly including super and look at our overall diversity between investments.

Yearly, I plan to continue updating our total super net worth.

$180,703 as of July 2020

Superannuation rules can change, please do your own research and seek professional advise.

Links –

https://moneysmart.gov.au/grow-your-super

https://www.ato.gov.au/Individuals/Super/

2nd Quarter 2020

Half way thru 2020 already!

It seems that the doom and gloom of covid-19 is now past us and we are all continuing on with our new normal. For us in Western Australia, it’s very much back to normal. Parks are open, cafes/pubs are running again and toilet papers back in stock!

We have earned and saved a large percentage of money over the last quarter, with extra shifts and no daycare fees helping to create highest savings rates to date. In direct comparison to the many individuals out there who are still laid off work.

Time to update the progress.

2nd Quarter Income/Expenses

Income: $36,706

Expenses: $14,289

Savings rate: 61%

2020 Income/Expenses:

Income: $61,976

Expenses: $31,738

Savings rate: 51%

Q2 Expenses Breakdown:

Home Loan Balance:

Balance: $-197,930

Q2: $17,401

2020: $25,089

Travel:

$0

Hopefully a family holiday in Western Australia later in the year.

Goals Update:

Highest savings rate for a quarter of 61%

Highest savings rate for a month in June of 69%

Highest savings rate for 1/2 year at 51%

We have under $200,000 left on mortgage, and we are on track for end of year goal of $47,000 paid off home loan($178,023).

Overview:

We have had excellent savings rate over the past few months. With daycare fees back in July, I expect a more normal savings rate of 30% for the next quarter.

I will be doing a post about our plan for Superannuation soon, we have recently changed super funds and increased our salary sacrifice to help maximize the tax effectiveness of Super. We plan to make sure we match any co-contributions or spouse tax refunds.

Other than that, we will keep chipping away at our home loan and keeping an eye on our savings rate.

Thanks,

1st Quarter 2020

Currently writing this amid COVID-19 world wide shutdown, luckily for us we are busier then ever. The mining industry in Western Australia is still open and I have had opportunity to pick up a number of overtime shifts over the last two month. I might aswell, as we aren’t allowed to go anywhere while this crisis goes on.

Mrs FMT starting working part-time at a pharmacy at the end of February, which now looks like it is one of the most secure jobs in the country.

The kids have started childcare, the cost for childcare for the 3 kids is almost as much as Mrs FMT salary, but the original plan was just to give her a break from the 24/7 demands of the kids.

A unique situation is that as of 1st of April the government has temporarily made childcare free, this will be a huge bump in our income next quarter.

With all the stand-down’s and lay offs happening, I have looked into our emergency fund/offset account and we could last 1 1/2 years without work. I would hate to have to chew into so many years of hard work but it is reassuring to know.

This just goes to show the importance of knowing your cost of living and having at least a 3-6 month emergency fund.

Time to update our progress.

IMG_0615

IMG_2219

1st Quarter Income/Expenses

q1chart2020

Income: $25,269

Expenses: $17,449

Savings rate: 30.94%

Expenses Breakdown:

q1chart2020b

Home Loan Balance:

Balance: $-215,331

Q1: $7,688 paid down

2020: $7,688 paid down

Travel: $144.5

One night accommodation in Dunsborough for a friend’s wedding.

Goals Update:

No changes to goals,

Looking forward to next home loan goal of $200,000! 

We have just made our minimum goal for savings rate of 30%.

Overview:

With all the craziness that is going on during this pandemic, we are extremely fortunate and grateful to be in the position we are.

We are able to quietly work away at our goals while this event goes by. Lucky to be employed, healthy and happy.

That’s it for this update, Thanks

 

 

4th Quarter Update 2019

Wow it’s been a busy year! Not only the end of a year but the end of a decade.

Time to update our progress.

4th Quarter Income/Expenses

Income: $26,594

Expenses: $16,358

Savings rate: 32%

2019 Total Income/Expenses

Income: $111,396

Expenses: $44,293

Savings rate: 61%

Expenses Breakdown:

Home Loan Balance:

Balance: $-223,019

Q4: $15,492 paid down

2019: $56,338 paid down

Travel: $0

we pre-paid for a week accommodation in Dunsborough during early December.

Goals Update:

In Mid October we past the goal of 50% of home loan paid off.

Looking forward to next home loan goal of $200,000!

For month of October we went over our goal of 50% savings rate, with almost a 59% savings rate

The saving rate has had quiet a hit for the last two months, down to low 20-25%.

I would like to refocus on our spending on the basics like groceries to bring up savings rate to minimum 30% in 2020.

New Goals:

  • $45,000 to be paid off home loan by end of 2020. Home loan balance $178,019
  • Grocery shopping budget $150/week.

Overview:

A busy year for our household, with the birth of the twins. Now having 3 kids under 3, it is full on!

Luckily, we have automated a lot of our finances and can leave most of it on autopilot.

With only one income, we still need to focus on our spending to make sure things don’t get out of hand but we are in a strong position going into 2020.

That’s it for this update, Thanks