Late Starter to FI Series Progress Update 2022 Part 1

stacks of golden coins on a bed of soil with seedlings growing on top of each stack

I started the Late Starter to FI Series to highlight those of us who began our FI(RE) journeys later than the ‘traditional’ FIREes; specifically those who started in our 40s, 50s and 60s.

And if you know my back story, you already know that I started this blog because I didn’t find many late starters when I first discovered FIRE at 47. There were many in their 40s but they had either retired for many years or about to retire. No one was just starting out.

So I am eternally grateful to the 34 Late Starters who have so generously shared their stories. This proves that there are late starters out there. And the more we read each other’s stories, the less alone we feel; the more achievable our goals are when we see others like us accomplishing them.

We are a community and I want to also share our progress. Because being on the path to FI is not a get rich quick scheme 🙂 It really is like a journey – with setbacks, roadblocks and detours along the way. And we want to celebrate any wins along the way too, of course!

The first progress update was published last year.

This year, we’ll divide the progress update into several parts. We’ll feature 3 Late Starters in Part 1 – here are their original stories:

Late Starter to FI #6 – Fire For One

Late Starter to FI #21 – Vinnie

Late Starter to FI #27 – Pursuing Slow FI as a Late Starter

Do you have a Late Starter story to share? Please connect with me via email (info@latestarterfire.com), TwitterFacebook or Instagram.

Disclosure: Please note that I may benefit from purchases made through my affiliate links below, at no cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases. Thank you for your support

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Inflation

Inflation hasn’t really affected my strategy, at least not yet. But who knows what will happen?

I do have some concerns about the rising cost of electricity, although a change of provider last year has actually reduced my bills from what they were.

But I do think it might be time to investigate solar options. I’d also like to get rid of my gas hot water and oven – it seems a bit pointless to be paying supply charges for both gas and electricity.

Any strategy changes?

Last year I changed my investment mix in my superannuation (retirement account) from the default settings to an all-equities mix. I just checked my super balance last night to discover it’s dropped by about $15000!

Thanks so much, Vladimir Putin, for your invasion of Ukraine and consequent market upheaval. Luckily I have at least 8 or more years until retirement, so I’m sitting tight for the moment on that.

It’s slightly uncomfortable to see the that drop though, and if I was just about to or had already retired, it would probably bother me more. But all the wonderful blogs I read that show clearly that the market recovers mean that I can watch this development without freaking out.

I suppose the other change I’ve made is that I was originally planning to pay out my home loan as soon as possible. But now that it’s fully offset, I’ve decided to just relax about that and start investing instead.

 

What can we celebrate?

I have been able to start investing in ETFs finally, now that the mortgage is fully offset.

3D of word PAID with pic of house

On the path to Financial Independence ...

I’m still on the path to FI, although admittedly over this current financial year, I’ve been a bit slacker on the savings side and have loosened the purse strings a bit. I probably should rein it in a bit!

I think I got a bit bored and also, because I haven’t had a specific financial challenge for this year it’s also reduced my focus a lot. I do have some repairs that need doing around the house, so I’m focusing a bit more on saving up to have these done.

I’m still working. At this point, I have no idea what I will do in retirement but I’m sure there will be a lot of reading involved.

Any strategy changes?

I have the same strategy ie keep saving as much as possible and continuing to live frugally.

Stock market and housing prices have slumped in New Zealand. I put money in but I’m losing more than I’m putting in. Quite depressing. Having approximate $170-$180k of investments overall (including super) and here’s what has happened per calendar year (investment gains / losses):

Year 2019 $7991.13

Year 2020 $15236.32

Year 2021 $12603.29

Year 2022 -$15053.39

I started investing on April 30th 2018 but didn’t keep the stats at that point.

 

Side hustles

I started a YouTube channel ProjectFrugal on 28/12/20 – 427 subscribers so far with 110+ videos – hard work for no reward!

Also started a blog – Project Frugal a couple of weeks ago to attempt to drive some traffic to the YouTube channel which I’m hoping will eventually get monetised. But early days on that …

What can we celebrate?

Something we could celebrate is that I achieved a net worth of $1M NZD a few months ago. Then it dipped below $1M and is slightly above it again. It includes house value etc – it was a good milestone though.

numerals 100000 candles with sparkles

On the path to Financial Independence ...

I’m still pursuing FIRE, charging ahead as much as possible and still knuckling down despite what’s happening in the market(s).

We were also looking to move to Portugal to hopefully become missionaries or semi retire but due to the recent downturns etc, we have put that on hold until the market recovers. Could be 1 to 3 years away yet.

 

Inflation

To be honest, inflation has not impacted my strategy much. Though I am really surprised by how quickly prices of goods have ballooned. For example, flour used to be RM1 per kg and now it’s RM3! That’s quite an increase! Also, recently the ringgit slid down against the US dollar, so this adds fuel to the fire.

I live a frugal lifestyle – I cook most of my food, bake my own bread and even grow my own leafy greens. I barely take overseas holidays (even local ones lol) and hardly drive (in 2021 I drove a grand total of 3000km), and my hobbies are simple and low cost – reading and gardening. Most importantly, I have no debt to service. So, I’ve not really felt the pinch of inflation nor has my lifestyle been impacted much.

So I’m currently just maintaining the same budget, though I expect my investing dollars to shrink thanks to the weak ringgit. Sniff.

Any strategy changes?

I spent most of Nov 2021 – April 2022 learning about investing. Before, my investing strategy was basically “throwing money at an investment asset and hoping for the best”. Then, frustrated that I kept hitting walls or unexpected pitfalls, I deep dived into every book and YouTube channel I could find on investing. I realised that my foundation was weak, so I was not able to evaluate which investment vehicle was right for me.

Sifting out the weeds was a challenge, however. There’s so much content out there that is written with an angle or ulterior motive, that it’s difficult to decipher what is “truth”. For example, in the Malaysian financial sphere, cryptocurrencies and roboadvisors are heavily promoted. I vaguely realise that there’s more than meets the eye and I don’t have the whole picture nor am I sure if they were right for me.

So I read books like Investing 101, A Random Walk Down Wall Street, The Elements of Investing, The Little Book of Common Sense Investing to finally understand what sound investing principles are about. Then, and only then, could I define my financial goals, investing style and even design my portfolio. I realised I should have done this before investing my money. Still, better late than never!

My current strategy: Besides contributing extra to my retirement accounts (called EPF in Malaysia), I’m also investing abut 30% of my salary each month into total stock market funds using the Boglehead method. As a Boglehead, I believe in low cost, widely diversified index funds. I also favour a passive investing strategy where I stick to a portfolio of 70% equities and 25% bonds (or bond-like instruments) and 5% REITs + stocks. No timing the market for me, though I do buy a selection of stocks and REITs on the side with “fun money”.

I’m currently busy rebalancing my very messy legacy investing portfolio to the new strategy. Untangling my legacy investments is probably going to take me the entire year or more. The process is painful but I’m glad I’m doing it now rather than at 65!

 

Any epiphanies?

Received a big a-ha moment a few months ago that made me realise that I really should stop being so hard on myself in terms of managing my finances. Gaining clarity about why I did what I did was healing, and I realise I’m doing quite well despite the mistakes I made in the past. And although I don’t know what the future has in store for me, I’m confident I can survive and figure out things in the future.

Side hustles

Currently, I have no side hustle, though my blog seems to be attracting attention from surprising places. I think it’ll benefit my career in the long run to be seen as someone who can write about financial topics!

Still, I’m currently hustling, writing numerous personal finance essays for the blog – for free, lol. My journey learning about investing has fuelled my desire to write something that can help people like me to make informed decisions about their finances.

As I said, there’s so much noise out there, and it was super hard for me to educate myself because a lot of content (at least in the Malaysian finance world) has an agenda. It frustrated me how tough it was to get the whole, unbiased picture of sound investing. A lot of times I feel like I’m pushed financial products without a solid reason WHY I should take it up in the first place.

Before this development, my website was just a place to record my financial journey, but now I feel more galvanised to write content that will help people. Wish me luck!

 

What can we celebrate?

I’ve gotten over my fear of investing!! That’s such a big deal for me. The last time you spoke to me, I was largely paralysed by indecision and confusion. Now I feel like I’m heading somewhere.

colouful lines on chart

On the way to Financial Independence ...

I’m definitely still in pursuit of FI. I’m still aiming to retire at 55, which is the old retirement age in Malaysia. (It’s 60 now) I’m more confident, judging from my calculations, that I am on track.

Before, because investing felt like such a weird, complex subject, I felt like I was flailing in the dark and that retiring at 55 is a big “maybe, hopefully”. Now I am more confident of my strategy.

Technically, I’m Coast FIRE but I’d like to add more wood to the FIRE plan for now.

And I also hope to gain clarity on when I can stop worrying that I’m REALLY safe to Coast FIRE.

 

Back to Latestarterfire

Thank you Fire For One, Vinnie and Elizabeth for sharing your progress updates. It’s so exciting to read that you’ve all had wins in the last year from paying off your mortgage, getting to $1 million net worth to conquering the fear of investing.

I love that all our strategies are evolving and we’re all still on the path to Financial Independence even though the markets are volatile and inflation is affecting our cost of living.

It’s going to be an interesting year ahead! Looking forward to next year’s progress updates already, haha 🙂

What is your progress on your FIRE journey? Update us in the comments below!

Late Starter to FI Series #34 – Start Where You Are

Start where you are | Use what you have | Do what you can | superimposed on picture of tree and canoe in a lake

Welcome to the Late Starter to FI series!

I am a Late Starter – I discovered the FIRE (Financial Independence Retire Early) movement when 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’s such a relief knowing I’m 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.

Please join in the conversation in the comments below. I encourage you to share your story if you fit the profile of 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 or Facebook or Instagram

If you’ve missed any of the previous stories, you can catch up here – Late Starter to FI Series

And if you can’t wait to start on your own FIRE journey, check out my step by step ultimate starter guide, Late Starter to FIRE Action Plan.

Disclosure: Please note that I may benefit from purchases made through my affiliate links below, at no cost to you. Additionally, as an Amazon Associate, I earn from qualifying purchases

Start where you are | Use what you have | Do what you can | superimposed on picture of tree and canoe in a lake

Today’s late starter is Maz, an Australian reader who has so generously shared her story. You can connect with Maz at Mazfires@gmail.com – here is Maz in her own words …

A little about me

My partner and I are in our early 40s and live in a large regional centre in Australia. We live on a suburban block with our beloved dog.

I enjoy exercise, reading and cooking. My partner loves making furniture and any sort of DIY.

We are both in essential services and value the security of these jobs, especially since the pandemic. We have kept our jobs and maintained our standard of living through Covid – probably saving more since we haven’t been able to go on holidays!

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Looking back ...

I’ve had a budget since I first moved out of home. I was on a basic wage starting out and learnt quickly that if I didn’t put money aside for bills, I wouldn’t have it when they were due. And I also learnt the hard way that credit card interest quickly adds up. Luckily, I learnt this quickly before I did any damage to my finances.

In hindsight, these principles really set me up. I worked throughout my 20s and put myself through university in my late 20s to complete my Masters degree.

At 30 I was starting a new career, with almost no savings, but improtantly, no debt except my HECS (a government funded student loan that covers tuition and is indexed to inflation but interest free)

Lightbulb moment

Like many others, I first came across FIRE via Mr Money Mustache several years ago (maybe 5 or 6). At the time, it did not resonate with me at all.

I thought I had to sell my house and buy a tiny apartment. And sell my car and cycle everywhere. This did not fit the lifestyle I had wanted. I like my house. I like my car. I like my life!

A few years later, I was at a different point – we had a home we love, had great relationships with our extended family but what was next?

We’d been unable to have kids and it led us to rethink the assumptions we had had for our life together.

Sometime last year, I was bingeing on personal finance podcasts and found FIRE and CHILL. Pat and Dave broke FIRE open with their emphasis on the underlying principles.

I remember listening to one of the early episodes and thinking – we already live well below our means, wait! – we already saved a good part of our income – wait! Is this something we could do??

 

Our financial situation at the time

We’d been sensible with our money – putting extra on our mortgage, always lived within our means and, mostly, saved up for the big things we wanted.

But apart from superannuation, we had no investments, just a small emergency fund.

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First steps on the path to FI

It really changed our approach to our finances – to think about how we could make our money work harder to give us more freedom and flexibility.

I looked at our budget and realised we already had the basics covered. We were already saving a good proportion of our income into our superannuation and extra mortgage repayments. I think it was around 30% at the time.

So the jump to FI wasn’t too hard – as compared to when I first read MMM. But it took some thinking and re-thinking about how to apply the principles to our situation.

How we think about our finances now

We think in terms of inside superannuation and outside superannuation. The last few years we’ve made additional contributions to our retirement funds. And with the recent high market returns, our superannuation has done well. It’s only been recently that I’ve realised how well.

Here are the calculations (not our actual numbers).

Let’s calculate our FI number using the basic 25x yearly expenses – 25x $50,000 = $1,250,000 allowing for a 4% withdrawal rate.

Then let’s assume half comes from my superannuation and half from my partner’s. To start drawing down at 60 years of age (when we can access our retirement accounts), we need $625,000 each in our retirement funds by then (half of $1.25 million).

If our current superannuation balance is $200,000 each, let’s use the rule of 72 to project that forward (or a compound interest calculator). If my superannuation makes 7% per year, it will double every 10 years. So if I’m 40 now, when I’m 50 it will be worth $400,000 even if I don’t make any more contributions.

Then double again between 50 and 60 years old to $800,000. Each!

So, our superannuation can just sit there for the next 20 years, and we’ll have enough! This is what’s referred to as COAST FI. We don’t need to add any more to my superannuation – the compounding and time does the work.

This is amazing! We could both go to part time work, just to cover our living expenses from now to 60, and not need to invest any more.

We can dream bigger!

So now we get to dream and be even more ambitious.

We can both go part time if we like.

We can risk a job change to something new, but lower paying, or less secure than our current jobs.

I’ve already had a conversation with my boss about changing to 4 days a week (we are still negotiating).

So how can we move our ‘work optional’ date forward, and forward again?

Maz's dog
My beloved dog

What are our new goals?

We have 2 big goals at present: the first being to pay off the mortgage. Our lofty goal is to have it completely paid off within 5 years.

I know mathematically we’re better off paying the minimum and putting the rest into investments. But for us, it represents security, and flexibility and will significantly reduce our expenses.

It’s also taking advantage of being fit and able to work full time while we can. You never know when life can suddenly change. One of us, or a family member, could become sick or injured. If this happened, we might not be able to work full time, or might need to take on an increased caring role.

Our other goal is to invest more, to be able to fully retire at 55. The strategy is simple, just low cost index funds. We’re not keen on property, because we don’t want to borrow large amounts, and that’s just our personal preference.

 

Our current budget breakdown

Minimum mortgage payment 15%

Short term expenses 15%

Yearly expenses 15%

Additional mortgage repayments 15%

Outside retirement investments (taxed brokerage account) 10%

Other long term lifestyle goals 20% (includes holidays, home renovations)

Additional superannuation contributions (like a 401k account) 10%

Specific challenges or advantages of starting late

I think for people just discovering FI, especially if you think you’re too old – my advice is just start where you’re at.

You don’t need to side hustle, or start your own business, unless you want to.

You need to spend less than what you earn and invest the difference. Even if all you do is add extra to your retirement, you are still ahead, in my opinion.

I use YNAB, which is a detailed budget tool. But the Barefoot Investor buckets might work best for you.

I was chatting to a friend about this. Late starters may not have as long for interest to compound, but we can still save.

I think later in life you have a stronger sense of yourself and your values, which makes it easier to prioritise the needs of your future self over instant gratification.

Resources I've found useful

Books:

The Barefoot Investor by Scott Pape

An Aussie Finance Classic. If you really feel like you have no idea where to start with your finances, this gives you a step-by-step framework. It includes banking, getting out of debt, budgeting and starting out investing.

The Simple Path to Wealth by JL Collins

If the calculations I’ve included don’t make sense, this is your book. It’s in the title – the basics of investing and compounding for passive income. If you’re knee deep in analysis paralysis ot side hustle YouTube, it’s great for perspective.

Budgeting:

YNAB – You Need a Budget

This is an envelope style, or zero-based budget tool. It really helped me find the extra percentages to add to our savings rate. A great tool for prioritising your financial needs and wants.

Podcast

FIRE and CHILL

As I said above, it really emphasises the principles of financial independence over tiny details. Both hosts have their own blogs too.

Dave from Strong Money Australia

Pat from Lifelong Shuffle

What's next?

Once our home is paid off, we’ll turbo charge our saving and investing, to move our retirement date closer and closer.

We’re planning a holiday in Australia next year, as things open post pandemic. We’re also planning an overseas holiday in the next few years.

I love talking about this stuff and bouncing ideas around. Drop me an email if you want to chat about your own ideas – Mazfires@gmail.com

 

Back to Latestarterfire

Thank you, Maz for sharing your story.

For me, your story highlights the importance of sharing our own stories with others. Even though reading Mr Money Mustache did not resonate with you at the beginning, it did many years later.

Another point that strikes me is that if you have the basics right from a young age, the stretch to FI is not big. It’s just a matter of tweaking a little here and there and you could be at Coast FI very soon.

And I love your advice to other late starters – just start where you are. It truly doesn’t matter how you start or what you do – the key is to start today.

Did FIRE resonate with you when you first found out about it?

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