Latestarterfire, Author at Latestarterfire

February 14, 2020

How to reduce your water bill – by reducing your water usage

When I started on my FIRE (Financial Independence Retire Early) path, I quickly realised that I needed to reduce my bills, particularly my recurring bills.

Utility bills are recurring bills. Electricity, water and gas.

But to get quick results, I tackled the low hanging fruit first – my takeaway coffee consumption, netflix subscription (that I do not use), getting weekly takeaway meals, food wastage and so on.

In Nov 2018, I installed solar panels. It turned out to be a big project in which I used my emergency funds to pay for it upfront and waited months for the state government to reimburse me half the amount. But it was worth it – I reduced my electricity bill by 80% in 2019.

It is now time to tackle my water and gas bills in 2020. I will focus on my water bill in this post.

The trap of automating bill payment

A word of caution first. I did away with paper bills a few years ago. It was just easier especially when I travelled. Bills appear in my email and I pay via my credit card. These days, I pay all three of my utilities via direct debit ie money is automatically deducted from my credit card or everyday account on the due date.

It is very efficient and I never pay a late fee anymore. But the trap is that it is so automatic that I no longer review them as closely as I ought. I glance at it quickly as I check my email at work and most times, the amount doesn’t register. That is, until I note it when I track my spending. By then, I am too lazy to look up the electronic copy of my bill.

My water bills arrive 4 times a year, charging me for water usage in the preceding 3 months. Last year, in order to smooth out a big peak in expenses every 3 months, I opted to make monthly payments of $90 (as agreed with the water retailer based on my 2018 bills) via direct debit.

So now, I had even less incentive to scrutinise my bills. As long as I had $90 in my bank account on the 18th the month, I was set.

I still have this option set because it works better for my budget. But I will be more vigilant in 2020.

Breakdown of my water bill

First, I need to understand what I am really paying for. I was in store for a surprise. You would think that the majority of my bill would be for my water usage. You would be wrong.

There are three parts to my water bill.

Part 1 – Usage charges

There are 2 usage charges – water usage and sewage disposal

a) Water usage

This is the amount charged for water that I used in the previous 3 months. The cost today is $2.662 per kilolitre (kL) for the first 440 litres (L) per day, increasing to $4.7277 per kLfor usage exceeding 880L per day.

For example, my latest bill was from Oct 25 to Jan 31, a period of 98 days. I used a total of 25kL in this period which meant I used 255L per day. As this falls under 440L per day, I am charged $2.662 per kL.

Therefore my water usage charge for this bill is 25kL x $2.662 = $66.55

b) Sewage disposal

This is for removing wastewater ie water going down drains, sinks, toilets and treating it safely. The amount is calculated as a percentage of water usage minus a percentage that they estimate is used outside the home.

So for this bill, 19.342kL out of 25kL is charged for sewage disposal at a rate of $1.1426 = $22.10

Part 2 – Service charges

Again, there are 2 components – charges for the water supply system and another for the sewerage system

a) Water supply system

This is a fixed charge, an annual fee determined every financial year and divided into quarterly amounts on each bill. It is basically charged to maintain water pipes and other infrastructure that treat, store and deliver water to my property. For 2019/2020 – this fee is $78.11

b) Sewerage system

Another fixed charge – and as the name suggests, it is a fee to maintain sewer pipes to my property and run treatment plants. For 2019/20, the annual fee is $458.26 and is divided into quarterly amounts on each bill.

Part 3 – Other authority charges

My water retailer collects money on behalf of Melbourne Water and Parks Victoria.

a) Waterways and drainage charge

This is a separate charge to the water supply system charge in Part 2 and collected on behalf of Melbourne Water. It is used to maintain and improve the health of our rivers and creeks, drainage and flood protection. Once again it is an annual fee divided into quarterly charges. For 2019/2020, the annual fee is $102.08

b) Parks charge

This annual fee is collected on behalf of Parks Victoria and totally unrelated to water and sewerage services or usage. It is used to maintain parks, zoos, the Royal Botanic Gardens and the Shrine of Remembrance in Victoria. The minimum annual charge for 2019/2020 is $79.02 and is normally payable in the July/August bill.

What can I do to reduce my water bill?

From the breakdown above, only Part 1 of my water bill ie water and sewage usage can be directly influenced by my actions.

Annual charges for Part 2 & 3 of the bill total $717.47 which are all fixed charges that I can’t do anything about. All home owners have to pay this, including landlords. In most cases, if you are renting, you only need to pay for your water usage and sewage disposal.

So how much water do I use?

In 2018, my water usage was 79kL which meant an average of 216L per day – at a total cost of $1033.51

In 2019 I used 101kL, an average of 276L per day. Not good! My water usage increased but the total cost decreased to $986.48, mainly due to a decrease in sewage disposal rate in 2019.

How does my water usage compare to other households?

Umm … not good!

Target 155, a water efficiency program to encourage Melbournians to limit water consumption to 155 litres per person per day, has been in operation for years. In 2018/19, average consumption was 162 litres per person per day. My average of 276 litres per day is way off the mark.

Why should I bother reducing my water usage?

All you personal finance nerds reading this will conclude by now that even if I achieved the target of using 155 litres per day, the money saved is minuscule.

A quick calculation tells me I can save $155 or thereabouts. In a year.

However, not everything in life is about money.

I remember living through the Millennium Drought which was from 1997 to 2009. Newspapers published how full each of the city’s dams or reservoirs were every day, much like they do with the day’s forecast temperature. We had water restrictions, in varying stages of severity. Water usage, how full the dams were, whether any rain was forecast featured in every day conversations.

But slowly over the last few years, I have largely forgotten about those days and reverted to bad habits and my water usage as a result has crept up.

We never know when another drought may occur in Melbourne – there are certainly droughts in other areas of the country at the moment, most notably in New South Wales.

Water is a valuable resource – without it, we die. Simple as that. We can live without food for a while; we can’t live without water.

One of my goals for 2020 is to live more sustainably. So I will do my best not to waste water. And limiting my consumption to 155 litres per day will be a good start in the right direction.

Ways I can reduce water use

Photo by Chandler Cruttenden on Unsplash

(a) Bathroom

I focus first in the bathroom as 30% to 40% of water used in a home is used in the bathroom, and most of that is wasted.

It turns out my shower head uses 24 litres per minute (measure how long it takes to fill a 1 litre measuring jug). Efficient shower heads only use 9 litres per minute. It was a no brainer – I spent $35 on a new shower head. I was surprised I adjusted quite quickly and did not miss the old shower head.

Some local councils have programs where you can swap your old inefficient shower head with an efficient one for free. Unfortunately my local council no longer runs such a program.

Next, I set a 4 minute timer every time I showered. It has taken me a good 4 weeks to a) remember to set a timer and b) finish showering by the time the alarm sounds. During the drought, we were all encouraged to have 4 minute showers and indeed it is still the recommended time frame.

This is very hard for me as I love relaxing in the shower, with the water cascading down and where I do my best ‘thinking’. Ideas come to me while I shower. I have been known to take 30 min showers until the hot water has run out. My average is probably about 15 minutes. I now acknowledge that it is a monumental waste of water. So I will need to do my thinking elsewhere.

I already turn off the tap when I brush my teeth but will need to use a cup when rinsing my mouth.

The toilet … I have a dual flush toilet but I have no idea how efficient it is. Some people don’t flush every time but I am not quite there yet …

Back to the shower – the next project is putting a bucket in the shower to collect water while waiting for it to heat up. I then use the water to flush the toilet.

b) Kitchen

The dishwasher does a full load every time. I have no idea what star rating my dishwasher is but will purchase as high a rating as I can afford when I need to replace this one. I also do not rinse before hand but will scrape off any food bits. Hand washing plates and cutlery do occur occasionally – will need to use the plug and fill the sink instead of freely rinsing off the detergent.

Water used for washing vegetables is recycled – I throw that water at my pot plants outdoors.

c) Laundry

Once again, I am not sure what star rating my washing machine has. But I will make sure when I have to replace it, that I buy one with the highest rating that I can afford. My appliances are very old!

I do full loads whenever I can. My washing machine automatically senses the level of water needed for each wash. I now wash with cold water only (saves electricity too!)

d) Outdoors

I have a mix of native and non native plants in my garden plus my wicking vegetable garden beds. I have a drip irrigation system with a timer. Permanent water saving rules are in place in Victoria – watering systems can only be turned on between 6pm and 10am. I confess I am a lazy gardener and only turn on the drip system when it hasn’t rained for a while.

My wicking beds don’t require a lot of water – the reservoir is refilled every 7 to 10 days during winter or twice a week during summer. Plus I use mulch to keep the water from evaporating.

The soil condition in my other garden beds is very poor. I have started composting as my worm farm struggles to consume all my veggie food scraps. I need to improve the quality of my soil so water is better retained.

e) Rainwater tank

This is in the research phase. I am investigating whether it makes any sense to install a rain water tank to store rain water (when it rains) and then use that water in my garden. It would cost more if I were to connect it to the toilet or laundry. Plus I have a complicated roof line so it may not be that simple a project.

Final thoughts

The above is not meant to be an exhaustive list, just something I can work towards or have implemented. Please feel free to add how you save water in the comments below.

I can’t wait for my next water bill, due in April. Reducing water use may not have much impact on my water bill. That is because water usage costs is a small part of my water bill – the other parts are fixed charges I have no control over. But it will have an impact on the environment. And that makes it worth doing.

How do you save water? How can I do better?

February 6, 2020March 16, 2022

Late Starter to FI series #5 – EducatorFI

Welcome to the Late Starter to FI series!

I am a Late Starter – I did not discover FIRE (Financial Independence Retire Early) concept until I was 47. This was way later, I thought than others who seem to have it all together in their 20s and 30s.

Since I started to write about my own journey, I have discovered there are many more Late Starters like me, yay! It is such a relief knowing I am not alone.

I want to share our stories, our unique perspectives and show that it is absolutely not too late for us.

So in this series, I particularly highlight those of us who start our FI journeys in our 40s, 50s and 60s. And explore questions such as ‘where do we start’, ‘can we still retire early(ish)’, ‘what are the specific challenges for us late starters’. We look at our past, not to castigate ourselves but so that you can learn from us.

Check out other stories in this series:

Please join in the conversation in the comments below. I encourage you to share your story if you too are a late starter. You absolutely don’t have to be a blogger or podcaster to share your story. Please email me at info@latestarterfire.com or connect with me on Twitter, Facebook or Instagram.

Without further ado, let’s meet Ed from Educator FI. He writes about being educators on the path to Financial Independence and has many lessons to share with us. He also brings us stories of other educators on the road to FIOR (Financial Independence Optional Retirement) in his interview series.

You can also connect with Ed via Facebook and Twitter

Disclosure: Please note that I may benefit from purchases made through my affiliate links below, at no cost to you

A little about me

I’m Ed, from Educator FI and I’m thrilled to be writing for Laterstarterfire today!

My wife and I are both career public educators in the United States. We started out as two broke teachers about 20 years ago and are now in our mid 40s. After ignoring our finances for way too long, we’ve started paying attention and are now on the path to financial independence.

How did we end up here? Well, I’ll take you along on our journey to being financial late starters.

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Starting out

My wife and I both came from backgrounds that were pretty tight financially. I was raised by a single mom (who is amazing!) and my wife is the child of immigrants. We were both always cared for, but didn’t have much beyond the basic needs.

We met and got together in college where we were attending on a mix of scholarships and student loans. Once we left undergrad and started earning a little bit in our first jobs, we enjoyed having money to spend. In fact, we spent more than we earned.

To become teachers, we both had to go back to graduate school. We borrowed to do it – stacking debt on debt, and deferring our existing student loans during that period.

Consequently, we really did start out as two dead broke teachers with about $130,000 in debt.

What we did right

While we were reckless initially (and I’m always impressed by people in their early 20s who AREN’T) we didn’t stay in that mode for long. Our childhoods left us with money issues, but we are also both ultimately responsible people. So, we did two things right even though we weren’t thinking long term about our finances:

(1) Dealing with debt

My childhood left me with a deep insecurity about money. I’m scared not to have it. So, I naturally hated debt. My wife was raised by very financially responsible parents and had been taught to loathe debt as well.

So, after our initial early years of being stupid, we got serious about paying down our debt. We put ourselves on a cash budget, stopped buying things we couldn’t afford, and put every extra cent to debt.

We took advantage of some of student loan forgiveness options to partially pay off our debt. Then we put extra money towards our student loans once the consumer debt was gone.

We were debt free by our mid 20s and have only carried mortgages or strategic zero interest loans since then. Getting rid of debt is one of the two things we did right!

(2) Growing income

My childhood of poverty left me with a fear-based approach to money. Money was anxiety and limitations. I had a deep desire to never have to think about it. So, I always made sure I made as much as I could.

Education isn’t a great profession for earning huge amounts of money, but there are plenty of ways to earn extra.

We worked every angle we could to raise our base salaries – increasing our education, building up experience, and taking on extra duty jobs for pay. After teaching for ten years, I went into administration and grew my salary. Every year we earned $10-20k more than our base.

We grew our income – which is an important part of our late start story. We now make almost 3x as much as when we started.

What we got (really) wrong

We made more money and never took on debt again. Great, we should be set, right?

Nope. Not if you spend every penny you make.

Our lifestyle inflated in a big way. We bought a bigger house and spent more and more on travel. We weren’t chartering private jets, but we weren’t thoughtful about our expenses.

I had achieved my goal – I made enough money that I could buy what I wanted without thinking about it.

We had been working in our profession for almost 15 years, and had almost nothing saved. No debt AND no actual net worth.

The light bulb moment

I still remember exactly where I was when I had my financial awakening.

We had just bought a vacation house. Yes, a vacation house. Talk about lifestyle inflation!

Sure, it was in partnership with another family. It probably actually saved us money compared to the stupid travel we were doing. But still – a vacation house!

I was sitting in my office, and got a text from a friend about buying another vacation property. My wife also sent a text about the same thing. I suddenly realised I’d be working forever if we just kept spending.

We love our jobs – education is important and teaching kids is rewarding. So working for a while didn’t sound all bad.But, no one should assume they will always love their job.

We’d also talked often about the old bitter teachers that shouldn’t be working in schools anymore but are hanging on because they have to. That could be us.

Something had to change.

Our first steps

Immediately after the financial epiphany, I checked on Amazon for financial books. I stumbled on The Automatic Millionaire by David Bach and another book called How to Retire Early by Robert and Robin Charlton.

They were great starts that opened up a new world. (I now recommend JL Collins’ Simple Path to Wealth as the starter book) That first year, I went down the rabbit hole and began consuming everything related to financial independence – books, blogs, podcasts.

My wife was a willing but not enthusiastic participant as we started to discuss what was possible and I went on a spreadsheet building binge.

After several months, we sat down and had a long goal setting conversation. From that point forward it’s been a joint project and she’s pushing as hard as I am.

That first year, we projected 12 years to financial independence. We got to work setting up automatic investments in our retirement accounts and began reversing 15 years of lifestyle inflation.

As we’ve learned more, set more aggressive savings goals, and taken specific actions we’ve cut that projection down every year.

Where we are now and where we are going

Last year, we took a big step. After reviewing the pros and cons, we downsized our beautiful house. We’re happier now, cashed out some equity, and cut our monthly housing costs in half. We’re renting a place for now while we consider our long term options. We’ll eventually buy again, but it will be a smaller place consistent with our FI plan.

It was a dramatic step that I wouldn’t have predicted when we started. We are running the vacation home that started it all as a short term rental. It’s not an investment, but it’s not dragging us down anymore.

In 2019, we passed seven figures in net worth. We just reviewed our goals from the previous year and set our goals for this year. We have set a FI goal of 2022 that looks very achievable.

When we hit that goal, we’ll have gone from clueless at 40 to financially independent before 50.

We still love the work we do. We may not FIRE, but we’ve embraced FIOR (Financial Independence Optional Retirement). Financial Independence will give us the ability to work if we choose, not because we have to.

That’s changed my relationship with money. I always approached it with a sense of insecurity and fear of never having enough. Now, I know what enough is, and have a plan to get there. It’s a great feeling. I’m happier at work, more enthusiastic about risk taking, and our relationship is stronger than ever.

Late starter lessons

The most significant challenge for late starters is we’ve lost the big benefits of time. If we could go back and invest in our 20s, it would change everything. If we invent a time machine that would allow that … well I guess we’d be rich anyway and wouldn’t need to go back.

Instead, we just have to accept that time isn’t our friend.

On the positive side, a late starter will generally have the benefit of a higher income. Income, on average, grows over your lifetime. The 40s and 50s are prime earning years for most people. That’s a good thing. Unfortunately your lifestyle may have grown as well.

Once you wake up and get serious about your financial health though, you can create a pretty substantial gap quickly. Instead of scraping out a few dollars in your 20s, you can invest a lot more. You have to if you want to make progress. Or, you can accept a longer time horizon – both are great options depending on your circumstances and goals.

I also believe we are much clearer about our life goals now than we would have been when young. We’ve experienced everything that spending wildly has to offer. We know what full commitment to our profession feels like. We’ve had the big house of our dreams.

Now we can design our life to give us exactly what we find fulfilling – not just what we think we might want. As one example, our late start has allowed us to live in a smaller cheaper home with no loss of happiness.

Our FI target is exactly as much as we need to live a life of purpose with travel and giving.

It would have been easier to start earlier, but we might have reached the wrong targets. Now, thanks to our late start we will be financially independent and living exactly the life we want.

Latestarterfire Here

Thank you, Ed for sharing your story of 2 dead broke teachers eventually embracing FIOR and voila, you will achieve financial independence in 2022. And teaching us the importance of not succumbing to lifestyle inflation. The lesson I learnt here is that even without debt, we may end up with not much net worth if we spend it all.

I admire your decision to sell your beautiful dream home and rent somewhere much smaller. You discover you are happier with less. This is a huge lesson for me – your willingness to deviate from a known script and explore a new path. Sometimes I feel I cling too much to home ownership and love my home to bits. It would require a major mindset change for me to rent again.

I am excited we get to follow your journey from now on. I can’t wait to see all your options as you approach Financial Independence in 2022.

Update January 2021

Wow, it’s been almost a year since I wrote this and so much has changed – both personally, and in the world. The good news is all the financial things I mentioned still remain true. In fact, that’s the biggest update here: all our financial moves paid off even more quickly than expected.

When we first started, we had a general thought of financial independence by 2030. After a few years, we refined the goal to the 2022 I mentioned above. Amazingly, we beat that target by 18 months. It really highlights how much our later career income helped us course correct quickly.

The real game changer was getting our housing under control. After our initial downsizing, we continued to make moves and eventually moved back into our starter home that we’d been renting out. We used the money from selling our dream home to pay off the rest of our mortgage and had suddenly freed up even more money to invest.

This meant that in 2020, we were able to continue investing large amounts when the market dropped – even while we were impacted by furlough. Between the (much) lower expenses we have now and the unexpected market run, we hit our FI target in December 2020!

It’s strange to have made so much financial progress during a pandemic that hurt so many others. The financial shifts we’d made helped, but we sill constantly acknowledge the good fortune we’ve had along the way.

It’s an amazing feeling to have come from broke and clueless to financially independent by 50, all while working in a career we were passionate about. The security, freedom, and possibilities are incredible. That sense of possibility caused me to make a surprising decision.

I love the work I do, but after more than 10 years as an education administrator, I’d become fatigued by managing so many people. I’ve shocked even myself by making the decision to walk away from my job at the end of this school year. (The school year ends in June in the US)

My plan is to take a little time to rest and recover from what has been a brutal run trying to keep students, staff, and community safe during a pandemic. Then, I’ll decide how I want to get back into education.

I’m not sure what I’ll do next, but can’t quite describe the feeling of being able to choose anything just based on what interests me. That’s what financial independence allows.

It’s totally worth it, whenever you start!

Latestarterfire : Congratulations, Ed! What an exciting update 🙂 2020 was certainly an unusual year – so happy that all your financial moves worked to your favour and enabled you to reach financial independence! Wishing you all the best in your rest and rejuvenation efforts – and looking forward to hearing more of what you’ll decide to do after that.

Author: Latestarterfire

How to reduce your water bill – by reducing your water usage

The trap of automating bill payment