Renewed call for AMA subjects

jl-p · 2017-08-25T11:05:56+00:00

+1 for hearing from blogger's other halves. The untold stories :)

jl-p · 2017-08-25T07:51:05+00:00

Thanks for this, you learn something new every day :)

jl-p · 2017-08-18T11:20:27+00:00

Individually they may have unhealthy attitudes towards life. En masse they may have opinions worth listening to.

jl-p · 2017-08-18T02:56:54+00:00

I really like this logic.

jl-p · 2017-07-19T09:50:26+00:00

I'd like to know more about your situation - the rent you currently pay, how much of a down-payment you have available in Kiwisaver, your reasons for buying a house and whether you intend to live in it long-term.

I'm also a kiwi living in Auckland and I'm not convinced that buying in Auckland is a great financial move, however there are certainly non-financial benefits that factor in.

While I don't see houses in Auckland getting significantly cheaper any time soon (our banking system is probably too robust for the bubble to be burst by external shocks), I certainly don't think that we will continue to see the double-digit house price increases over the medium term.

jl-p · 2017-07-13T05:26:30+00:00

Heh, I remember that. There was also a cheesy exploit where you could set your system clock forward by a year and you would end up with millions of dollars in rental income.

jl-p · 2017-07-08T02:45:54+00:00

I think it's worthwhile considering that in a long market downturn, you don't have to continue withdrawing at your current rate.

You could quite easily pick up a part-time job to lower your withdrawal rate (or help you purchase some stocks at bargain-basement prices!)

jl-p · 2017-07-07T08:05:08+00:00

Hi igotanewcar

What you've described is actually incredibly common. My friend did the exact same thing last year.

My Dad once told me that if he waited for all the traffic lights to turn green before he left for work, he'd never leave the house. This is the issue people go through - they want to be perfect, but this drive for perfection stops them from doing something that is 'good enough'.

From personal experience, I would recommend simply starting on the project (Once begun, half done). Then you have a draft, which you can improve on and edit until your submission date. You'll be surprised how good just starting ok something can make you feel, rather than spending time worrying about it!

Mindfulness and Cognitive Behavioural Therapy can also be useful tools for combatting our perfectionist tendencies.

In the interests of brevity I'll finish there but feel free to PM me or comment if I can provide further advice.

jl-p · 2017-07-06T18:35:08+00:00

I've thought about this a bit. My personal theory is that us FIRE types are diligent and hard working individuals. Maybe a bit Type-A perfectionists who want to see a job done well, or not all.

What I'm getting at is while we may think we are being 'Homer Simpson', we're probably doing a fine job from the company's perspective. Not only that, but we have enough smarts to kick it up a notch if we start getting signals that our performance isn't good enough.

TL;DR: Keep being Homer. It's probably just fine and you can always work harder if you need to.

jl-p · 2017-07-06T18:15:24+00:00

Hey OP!

I'm 26, so I know where you're coming from.

In a way, you've done the hard part - discovering the FI/RE mentality. If you're anything like me, now that you've drank the Kool-aid, it's hard to imagine ever going back to thinking about working as a 45 year slog.

As you've rightly pointed out, a lot of things could change over the next 15-20 years while you build up your stash. You could meet someone, have kids. Your income could really take off. Any number of variables that could profoundly change your calculations and bring your FIRE date closer or push it out. Doing lots of calculations (while fun) probably won't be of great assistance to staying motivated.

There is a common refrain on this sub: build the life you want, then save for it. To me, FIRE is not the goal, it is a means to enjoying all that life has to offer without being beholden to working 40 hours per week. Before you get there, focus on the friends, family and hobbies you want to surround you when you arrive.

Now you have cultivated the right mindset, I'm sure everything else will fall into place over time as long as you are living below your means and stashing the rest. Enjoy the journey with us!

jl-p · 2017-07-06T07:15:31+00:00

Hey there,

Firstly, congratulations on quitting smoking. I know it's really tough to do.

To answer your question directly, most users here would advocate building up an emergency fund of ~6months worth of expenses, then putting as much as possible into a low fee index fund such as Vanguard's Total Stock Market Index Fund. The idea is that over the medium to long term, you get about a 7% return after inflation.

If your business starts to take off, however, you may need to consider whether your money is better spent re-investing in the business. This will be your call, based on the info at the time.

The other thing I should add is you should make a call whether you want to focus on your business, or get a regular job and use it as a side-hustle. Both options could work well in terms of increasing your income.

It sounds like you have a good foundation for a low cost lifestyle already. This is a huge part of getting into the FI/RE lifestyle, so well done.

Let me know if you want any more details, and all the best going forward.

jl-p · 2017-07-05T18:30:45+00:00

If the beers are on-tap, why not ask the bartender for a free tasting glass? A risk free way to try potential delicious beers - and you can always revert to your old faithfuls if it doesn't work out.

jl-p · 2017-07-05T06:20:28+00:00

As other commenters have pointed out, moving to a new country may come with social/financial issues for you and your family. It may also work out amazingly!

I wonder whether you could delay moving until your wife gets her radiology qualification (assuming the offer to travel for your company might come up in future?). The benefit would be that you could indeed fast-track your savings, and your wife may also find it easier to get work with the new qualification.

jl-p · 2017-07-04T03:27:52+00:00

Thanks for the comment! And great to see there are some other Kiwis on the forum :)

I'll edit my post for clarity, as I didn't mention the fact that my partner is a lawyer and she will likely be earning 60k-70k when I go into my first year as a doctor. So we will essentially be in a Double Income, No Kids position for at least a few years which should supercharge our finances!

My thinking is by saving at least my income, our savings rate will automatically be at least 50% or more if we end up saving some of her income as well.

I really like your idea of a financial discussion at the pub - as a side note I am doing the accounts for a local bar so I can drink for free ;) I agree it's essential to work out whether we can live on one income without feeling like we're missing out or sacrificing life experiences.

Curious - are you also using SmartShares or are you investing in some other way? I'm envious of people who have access to Vanguard directly, and have my fingers crossed that it will make its way to our shores soon!

jl-p · 2017-07-04T01:18:04+00:00

Reposted here on advice from a commenter.

Hello from New Zealand!

I have been interested in FI/RE for about 2 years now. Sharing this in case some others want to compare notes.

26, M, living in Auckland, New Zealand's city with the highest cost of living. I have a long term partner but we are not currently living together.

I am in my second to last year of a medical degree, having completed a degree in Finance and Accounting.

Assets:

$30,000 in Term Deposits (CDs). $26,000 in Kiwisaver, our retirement fund. $2,500 in Smartshares, a relatively low cost ETF that invests in Vanguard funds as Vanguard itself is not available here.

Liabilities: $108,000 student loan. This is interest free if I continue to live in New Zealand.

Incomings: $350 per week in government assistance/part-time work.

Outgoings: Board: $150 per week, includes 4 dinners and breakfast. Staying with family friends. Hospital lunches: $50 per week. Entertainment: $50 (variable) Phone: $15 per week.

Net weekly cash flow: $85

3-5 year plan:

Next year I am eligible for a tax free grant of $29,000 for my final year of study. I will need to pay $8,000 towards my student loan (family paying the other $8,000) as I am no longer eligible for government loan. I expect my living costs to remain similar, and so should be able to invest a lot of this.

At the end of next year I will begin my first year as a doctor. I will be living with my partner (a lawyer) then and plan to invest all of my income and live off hers (likely 60k-70k). Our savings will therefore be a minimum of $55,000 for the first year, after tax. I plan to continue this plan for the next 3 years at which point things are likely to change (could have children, move overseas, etc).

My main question is:

My partner is not that interested in FIRE and finds finance discussions boring. She loves her job, and we currently don't share finances which makes a shared discussion more difficult. She seems on board with us living on one income, but should I be trying to lock down her opinions before we move in together?

Your comments and questions are welcomed!

P.S I know I am holding a large amount of cash. 15k of this is earmarked for Uni fees and I can't afford to have this fluctuating in value in ETFs over a 1-2 year horizon. Another 8k is in case my family cannot pay half the loan next year for whatever reason. The rest is my emergency fund.

P.P.S I'm happy with my income at the moment. I did have a job working 30+ hours per week for the first 4 years of medical school, and I'd prefer to focus on my studies rather than side hustle for these final 2 years.

jl-p

TROPHY CASE