Category: Savings rate

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2023 Goals Review And 16 Months Progress Report

It is the end of April 2024 as I write this – so a review of my 2023 goals is long overdue. Apologies, my friends!

My word in 2023 was Adventure. I wanted to discover new experiences and activities as I prepare for retirement.

Well … there were two new big experiences in 2023.

1. Working a second job or as the young ones call it, a side hustle

2. Having Mum who has dementia in respite care at 2 different aged care facilities

There were also 2 overseas holidays in there somewhere …

1. Working from home

Working a side hustle from home is wonderful. I finally get to experience what working from home feels like and … I love it!

As a healthcare worker through the pandemic, I still went into work every day so I never got to experience the highs and lows of working from home that the majority of workers experienced.

But it is time consuming. I work one full day plus before and after my main job which doesn’t leave me much time to do anything else. There are upcoming changes – I’ll keep you posted when they eventuate later in the year.

2. Mum in aged care

Having Mum in respite care twice in aged care facilities was an adventure I wouldn’t wish on anyone. The emotional toll was horrendous. Watching her not coping in the facilities was very difficult. It will not get any easier as her dementia progresses and Dad needs time off from being her primary carer.

All right, let’s recap on what my goals were in 2023. I had 4 financial and 4 non financial goals. How did I go?

 

Goal 1 - Invest $30k in my shares portfolio

This goal was not accomplished because of Goal 4!

A reminder – my shares portfolio is what I will use to fund the 5 years of living expenses when I retire at 55 as I can’t access my superannuation (retirement account) until aged 60. 

My financial adviser, Deline assured me that I was on track to retire at 55 (HOORAY!!!) and that I could STOP investing in my shares portfolio. At this stage, the balance was not where I wanted it to be but I had to trust the math.

On a side note, the balance as at the end of April 2024 has exceeded that figure in my head – the figure I thought I needed to see before I could stop investing. So I’m very glad I listened to Deline.

I must admit I couldn’t stop cold turkey. I reduced the amount for a couple of months before stopping completely. But when the market was down in October/November, I couldn’t resist and invested some side hustle income.

In the end, I invested about $14k which included cash dividends received.

Goal 2 - Replenish emergency fund

I feel secure having 6 months of living expenses in my Emergency Fund. It was fully fiunded but I raided it to replace major appliances that died in 2021/22.
 
This goal was finally accomplished in May 2023. It’s taken more than a year and accomplishing it felt really good because it was a goal carried forward from 2022.

Goal 3 - Save $5k in home maintenance fund

This goal was accomplished, thanks to my side hustle income.
 

So I decided to aim for $10k.

I always wanted to have $10k in my home maintenance fund but didn’t think I could achieve it in one year so aimed to save $5k instead.
 

Because of this fund, I was able to take advantage of state government rebates and installed an electric heat pump hot water tank.

My original gas hot water tank was 7 years old. I didn’t want it to die in the middle of winter, forcing me to decide quickly to install anything recommended by the plumber. Which was what happened previously.

This is part of my plan to switch to an all electric house ie bye bye gas forever. There is still the central gas heating and stove to go – I’m waiting for more government rebates.
 
By the end of 2023, the Home Maintenance Fund was 90% funded.
 
Since I’ve been regularly contributing to this fund, I haven’t needed to raid my Emergency Fund.

2024 update – the dishwasher’s electronic control panel decided to die out of warranty, of course. So the home maintenance fund came to the rescue again.
 
And in February 2024, the fund is fully funded, YAY!!!

 

 

 

Goal 4 - Engage a fee only financial adviser

Mission accomplished.
 
I didn’t have a good experience at the start of 2018 after I’d pay off my mortgage and was wondering what to do with the ‘excess’ money that would have gone to the mortgage.
 

I had about $10k surplus at the time. I knew I should invest it but didn’t know what to do. No one was interested in talking to me. The guy at the bank said it wasn’t worth my while to engage him.

But thankfully, since then I discovered the FIRE community, educated myself and improved my financial literacy significantly.
 

All the saving and investing I’ve done so far is DIY. So I wanted an expert to cast their eyes over my numbers and tell me categorically if I’m heading in the right direction. I figured there is still time to course correct if I’m not!

I found Deline from Instagram. I had been following her for a while and liked her posts so I felt comfortable reaching out. Knowing that she understood FIRE was also important to me. It saved lots of explaining, haha.

Over the course of a few months and 3 meetings over Zoom, she worked through all my numbers. Based on what I told her I’d like to spend in retirement, she confirmed that I was on the right track. Phew! And could in fact, increase my spending a little. Believe me, hearing that was so comforting!

And as a result of her advice, I started new goals which I’ll detail below.

 

Goal 5 - Declutter

This goal was a massive fail!

I even enrolled in Joshua Becker’s 12 week online course, Uncluttered but didn’t do the work. The timing was unfortunate because the side hustle was starting at the same time. I can access the course at any time but haven’t done so again.

I just work in my cluttered study with towering boxes of stuff around me …

Sigh! I’m thinking this is one of those goals that will be accomplished when I finally retire – surely there’ll be no excuses then!

Goal 6 - Go to bed at 11pm

I would describe this as a semi failed goal. 
 
But I’m not giving up.

I succeed for the most part but get derailed on nights when I don’t have to work the next day.
 
This will be an ongoing goal.

 

Goal 7 - Go outside for 30 minutes every day

This goal can also be described as a semi failed goal.
 
I definitely do not achieve it daily but will try to make up for it on weekends. What having this goal has achieved is to raise my awareness of how little time I spend outdoors. It is much easier to achieve when I’m on holidays and exploring new territory.
 

So once again, this will be an ongoing goal.

 

Goal 8 - Do something new or visit somewhere I've never been before every month

This was definitely much easier when I was on holidays and exploring new places. I found it much harder to do at home though it started off well at the beginning of the year.
 

I visited and joined new libraries. Ok, this may have contributed to the semi failed status of Goal 7. I was able to borrow more books on my Libby app 🙂 And ended up reading 93 books in 2023.

Discovering park runs also contributed to time spent outdoors. I was participating in a 5km park run every week. And even participated in one for 2 weeks in London. But once I came back from my holidays, it was winter and I never went again until March 2024.

 

I visited Sydney, London, Amsterdam and Hong Kong in 2023. There was some work involved in Sydney but overall, I was on holidays.

I certainly enjoyed new experiences in these cities I’ve visited before in the past.

 – pattiserie/cafe crawl and omakase in Sydney
– explored canals in London, West End shows and of course, afternoon teas in various establishments
– visited art galleries, museums in Amsterdam and The Hague; enjoyed learning about windmills in Kinderdijk
– ate my way around and hiked new-to-me trails in Hong Kong. It was also a new experience to win a flight ticket to Hong Kong during their promotion to attract tourists back to the city
 
And now we come to the additional financial goals I set after the consultations with my financial adviser.

 

New goal 1 - Future car fund

I currently drive a work car so will need to purchase a car when I retire. The plan is to buy the car I’m currently driving from my employer.
 
The set amount from my weekly pay that was going to purchase shares was diverted to this fund instead.

It was 74% funded at the end of 2023.
 
2024 update – I am ecstatic to report that it is now 100% funded by the end of April 2024! Vroom vroom!!

 

New goal 2 - 2 years of living expenses cash buffer

The short answer is I did not make a start on this fund in 2023. 
 

At first, my plan was to use the side hustle income to save towards the 3 cash goals – home maintenance fund, future car fund and 2 years of living expenses fund.

In the end, I found it easier to use my side hustle income (which is variable per month) for the home maintenance fund and a regular amount from my main job towards the car. It was driving me insane watching all the funds grow at a snail’s pace.
 

Now that both the smaller funds are fully funded, I will direct everything towards the 2 year living expenses fund. And when this is fully funded, I can retire!

The purpose of this fund is to ensure I have cash on hand in case the market falls which in turn means the value of my share portfolio falls, just when I need to access funds at the beginning of my retirement. I will draw on my cash reserves instead of selling shares in that event.

More progress report …

Annual expenses in 2023

I spent 13% more in 2023 compared to 2022. 
 
The extra expenses were due to general inflation but the main increase was in home maintenance – installing the electric heat pump and fixing the electrical switchboard. I also started having a fortnightly cleaning service from September 2023, fully funded by my side hustle income. My travel expenses were roughly the same as in 2022. Food costs were 1% higher.

My income increased by 25%, thanks to my side hustle.

My savings rate was 42% (based solely on after tax income) which was a small improvement (increased by 3%) compared to 2022.

 

Net worth

My net worth grew by 21% 🙏
 

I have not included my paid off home in this figure. I don’t plan to move and haven’t kept up with the value of similar properties in the area. There is a lot of construction work in my suburb, with old houses replaced by gigantic units.

My net worth therefore consists of the value of superannuation, shares portfolio and cash accounts.
 
There were also 2 exciting milestones reached in the past 16 months.

 

Milestone 1 - $1M invested

My investments totalled $1 million 😮 at the end of 2023!
 
This is purely a combination of my superannuation (retirement account) and the shares portfolio outside of superannuation.
 
It wasn’t something that I was looking out for so it came as a surptise when I calculated my net worth at the end of December 2023 and realised a significant milestone was reached.
 
The predominant feeling I felt was RELIEF. The “end” is truly in sight now.

Milestone 2 - Superannuation balance doubled

My superannuation balance has doubled since 2018, the year I started to pay attention to it. During this period of 6 years, there were only 2 years when I maxed out the contributions.
 
When I reached Coast FI in April 2021, it had increased by 1.5 times. Since reaching Coast FI, I reduced my salary sacrificing drastically and relied mainly on mandatory employer contributions.

I cannot access my superannuation until 2031, when I turn 60 and no longer working. That’s 7 years away. Dare I hope that the market will be kind and another doubling occurs? I’ll update you on the progress 🙂

 

Final Thoughts

Until I sat down to write this post, I had no idea of how much was achieved in 2023!
 

Financial goals are being ticked off and milestones reached that I wasn’t even paying attention to.

And having only one more financial goal to aim for before I can quit work is doable even though the amount I need is quite high. But I still have two and a half years to go.
 
I did not factor in the time required for my side hustle in 2023. I am faster at the work now but the workload has also increased in 2024. But I am most grateful for the income it’s bringing in and the financial goals I’ve been able to tick off, purely because of the extra income. So I’m not complaining.
 

Overall, while my non financial goals were only semi successful, I’m happy to continue trying – I was aiming to enjoy the process and not focus on outcomes so much.

There you are – that’s my 2023 done and dusted. Follow me on Instagram or Facebook if you would like more regular updates or progress reports.

What will the rest of 2024 bring, I wonder?

 

Is it too late to ask ... how was your 2023?

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Spend Less Than You Earn is the Most Important Money Habit

As late starters, we long for a strategy or any tips that will catapult us into financial independence territory in a hurry.

After all, we are already so behind, with traditional retirement looming ahead, let alone daring to dream about retiring early.

We struggle to understand why we are not further along the path to financial independence despite working hard over many years.

The truth is, without practising the most important money habit of all – spend less than you earn – we will never get far ahead.

If I can summarise all the teachings on how to achieve financial independence, it is this – increase the difference between your income and expenses and invest this gap wisely – appropriated from Paula Pant of Afford Anything podcast.

The wider this gap is between income and expenses, the more options we have. We can use this gap to save for an emergency fund, eliminate debt, invest in index funds, purchase rental properties, start a side hustle etc – anything to move us further along our path to FI.

Why is it so difficult for us to live below our means? I know we all struggle with this, based on the many stories fellow late starters have shared in the Late Starter to FI series.

I don’t think it is entirely our fault.

 

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

hand holding bank notes on fire |spend less than you earn |
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Temptation is Everywhere

Our every day lives are bombarded by advertisements – on TV, radio, at the bus stop, on billboards along the freeway, in newspapers, magazines. And now they are more personal by getting into our social media feeds. And targeting us specifically with advertisements about stuff we googled while bored.

They promise us we’ll be happy if we just buy this gadget, wear these cool clothes with the to-die-for accessories; we’ll be relaxed and rested if only we purchased the spa experience, the luxurious resort holiday; the wonderful tools we must have to make our lives more organised & productive.

Our lives are messy and complicated even without a pandemic. Who doesn’t need help with making life a bit more bearable? A bit easier to cope with?

One of my favourite TV shows is Gruen on ABC – a panel of ad executives share their insights into various advertising campaigns, hosted by comedian, Wil Anderson. Once we are aware of how we are marketed to, we are more able to resist their messages.

Credit is Widely Available

Credit cards, interest free purchase, buy now pay later schemes, store credit … there are a myriad of ways to purchase something without paying up front these days. Plus there are redraw facilities or off set accounts on home loans where you can withdraw some of the money if you are ahead in your loan repayments.

I’m not going to bash credit cards. They have a place in managing my money as long as I pay the balance in full when they fall due. They are a convenient form of record keeping. I also love the flight reward points I earn. These days I no longer pay for flights on overseas trips.

It is so easy though to use these forms of credit to get what we want right now and worry about how to pay for them later. If we do not pay our credit card balance in full, we will pay an inflated interest rate on the balance. If we only pay the minimum amount due, we will fall further and further behind in our payments. And it becomes a vicious cycle.

Having a redraw facility on my mortgage was very convenient and dangerous – sometimes I forgot the money wasn’t mine to begin with. Because if I am ahead with my repayments, I can spend it, right?

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Then there is Lifestyle Creep

Over the years, as our incomes improve, so do our tastes – we desire better quality goods and a more luxurious lifestyle. I know I desire expensive French cheeses on a regular basis 🙂

We want bigger houses, prestige cars, exotic holidays … always wanting the upgrade, the best of everything.

Our friends tell us we can afford it, that we should reward ourselves for working so hard. We deserve it.

And before long, we are working all hours in the day and night just to fund this lifestyle.

 

But we have a Choice

While I do think there are many external influences as to why we are unable to live below our means, I also believe we have a choice.

No one can dictate to us how we should be spending our money.

That includes the advertisers, whose sole job is to make us want what they are selling, whose job is to sell us stuff.

It includes our friends and colleagues – who may not be telling us the truth about their finances. Their luxurious lifestyle may be funded by debt. Beautiful instagram feeds don’t show us how stressed they may be, trying to make ends meet.

We don’t have to buy the latest gadgets or cars or clothes or kitchen accessories just because we’ve been exposed to the ads or because our friends have them. There is no need to upgrade to a bigger house if we can’t afford it.

We get to decide how we want to spend our money.

Assess our Priorities

It is time to assess our priorities.

Do we want to achieve financial independence? And live a reasonable lifestyle in retirement, whenever that is?

If the answer is yes, then we have no choice but to spend less than we earn, to create that gap between income and expenses. So we can invest that gap.

Why do you want to achieve financial independence?

For me, it is to gain freedom and time. I want to be free to pursue whatever I want – to slow travel around the world, care for my parents, spend time with family overseas, commit time to some charities, indulge in new hobbies … to just live a fuller life than I have up to this point. And hopefully before dementia claims me as it has my mother.

When things are tough, when we resent cutting our expenses and modifying our lifestyle, it helps when we know why we are doing it.

And sometimes, we need to be brutally honest with ourselves. If we can’t pay our credit card balance in full each month, we can’t afford our lifestyle. Full stop.

Mindful Spending

Now it’s time to assess our expenses – what do we spend our money on?

I started tracking my expenses at the beginning of my FI journey. Then  I looked at what is really important to me, what I value. Can I have the same experience by spending less?

For example, drinking good quality coffee is important to me. Is buying a takeaway coffee every day, at an average of $4 a day the only way to achieve this? Probably not.

I now buy beans from my favourite roaster and make it at home with my moka coffee pot (affiliate link) for $1 a day. The experience is much more enjoyable and I begin my work day with less stress. I still indulge in a cappuccino when I’m out with friends because I value the social interaction and experience. But the bulk of my coffee expenses is dramatically reduced.

Eating good food gives me a lot pf pleasure. So I am happy to spend more on tea leaves instead of tea bags, organic free range eggs instead of cage eggs and so on.

But I also make sure I don’t waste any food, that I clear out my pantry, fridge and freezer regularly. And I am mindful of the prices I pay. I stock up on regular every day items when they are on sale. I cook a lot of my own meals at home instead of eating out or ordering takeaway. It doesn’t mean I don’t splurge every now and ten – I do but I just don’t do it automatically.

These are small examples of every day living expenses that can be reduced and were the easiest for me to tackle at the start of my FI journey.

Through discovering FIRE concepts, I’ve come to understand that mindful spending is not about deprivation. It is about spending that is aligned with my priorities and values.

Other Recurring Expenses

I looked at other recurring expenses next – the monthly or quarterly utility bills, the annual home and contents insurance, health insurance. These expenses often creep up without us noticing.

Where can I achieve some savings? How can I reduce these necessary expenses without sacrificing my comfort and peace of mind?

By installing solar panels, changing my shower head, changing insurance company etc – some are once off changes while others will be reviewed once a year to ensure I am on track.

Know Thyself

Discretionary spending is the hardest. What are your spending weaknesses?

Is it self care, kitchen gadgets, latest technology, comfort, conveniene, clothes, travel?

When do we spend? Why do we spend?

We know ourselves best.

I never thought about my spending habits before embarking on my FI journey. But I now realise a few home truths after analysing my spending patterns and habits.

Truth #1 - I LOVE spending money

I love that hit of endorphins when I spend my money – it makes me happy.

Truth #2 - I have many, many spending weaknesses

One is food – be it an exotic ingredient in a recipe I want to try or expensive indulgences such as French cheeses or fine dining experiences. I view these as luxuries now and I will indulge in them, just not regularly.

My other spending weakness is kitchen accessories or gadgets. I used to love wandering in kitchenware shops and will inevitably buy something which I will use once or twice. I no longer do this. I’ve also unsubscribed from online kitchenware, homeware retailers’ email list. The less ads I see, the less I am tempted by the latest gizmo.

I also love travel experiences. So I have a travel fund and a weekly amount is automatically deducted from my pay and deposited here. This gives me peace of mind that when the urge to travel is upon me, I already have funds available.

Truth #3 - I spend more when I am stressed, tired or bored

I cannot be bothered to cook so I order takeaway or I don’t have time to do a weekly grocery shop so I end up buying things on the run. I now freeze extra portions when I meal prep so I always have a ready to eat meal for the times I don’t feel like cooking.

However, I am at my most dangerous when I’m bored. I have been known to buy a plane ticket to Japan because I was bored at my work one day.

Truth #4 - I am IMPATIENT

I want it and I want it NOW.

These days, I leave my items in the online shopping cart then decide if I really want the items a week later. Most of the time, I don’t.

If I do, I use Cashrewards, a cash back site to earn a little money back from my purchases.

The point here is that once I understand why I spend money the way I do, I can put in strategies to limit that discretionary spending.

In addition, my spending behaviour has changed because my priorities have changed – I know I need every cent to invest, to get me to financial independence. I have to weigh it up – spend on this item, experience or invest that money instead?

So … now, I just direct that love of spending towards investing – I get that hit of endorphins when I purchase another parcel of shares. Win, win?

Why don't we just Increase our Income?

Good question.

Of course we can.

But if we don’t learn to spend mindfully or understand why we are spending in the first place, then the more income we earn, the more we will spend it.

And we are back to square one. To the vicious cycle of needing to earn more and more to pay for our lifestyle.

Combining the two strategies ie decreasing spending while increasing income is incredibly powerful. And undeniably the best way to increase the money we need to invest and thus get us to financial independence quicker.

In my case, I do want to increase my income – but I also don’t want to be burned out again or live a stressful life. I’ve regained my weekends and week nights since transitioning to my new role. And I value that time I’ve gained for myself.

For most people, increasing income is not as simple as asking for a raise. And may not be possible if we are already earning at the peak of our incomes.

It is much easier for late starters to look at our spending habits first (all those opportunities to reverse lifestyle creep) and then tackle the income part.

Final Thoughts

Every strategy and tip to get to financial independence starts with the money habit of spending less than you earn.

Therefore learning to live below our means is the FIRST step towards financial independence. We have to start creating that gap between income and expenses and invest that gap.

And while in our ‘advanced’ age (haha), we may not want to sacrifice certain aspects of our lifestyle, it is not impossible to reverse some of our lifestyle creep. And discover new ways of having what we want at a lower cost.

After all, we need to start saving towards our retirement that is just around the corner.

What strategies or tips do you have for spending less than you earn?

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