Welcome to 2020!
It’s a brand new year. And what better way to kick things off, than with an Epic Roundup Post!
This Epic Roundup Post showcases the best lessons and advice from the most prominent Aussie Financial Independence bloggers and podcasters out there!
I did the rounds, asking each content creator for their most important message for the FIRE community in 2020, and here’s what they came up with…
Every year I set an ambitious yet achievable financial goal. Last year it was to halve my mortgage (got there by November).
There is power in setting a clear vision of where you want to go, and power in placing the goal somewhere where you can view it. I also find that tracking progress on your goal is more likely to make it happen, which in part explains my obsessive checking and rechecking (sometimes several times daily) of my mortgage balance.
While the goal might look big at the beginning of the year, if you chip away at it dollar by dollar, eventually you will get there. And sometimes by focusing on a goal, you somehow attract the things you need to make it happen.
For reference, my mortgage at Christmas last year was $104,000. I wanted it down to $52,000. During the year we bought and sold a car, which added to the cost.
As at the time of writing, the mortgage is $30,000. In part, this was because I quit my job end October and received 4.5 months in long service leave. But I was pretty close to achieving it before this happened!
Having conferred with (my partner) Neil, this is our 2020 goal:
— Pay off the rest of home mortgage (currently sitting at just under $30,000).
— Invest $25,000 into ETFs/index funds.
A bit ambitious as I’m transitioning/pivoting post work, but we’ve put it out there. Neil is also making additional super contributions.
(You can find Serina on her blog The Joyful Frugalista. She also has a podcast with her friend Kirsti, called This Abundant Life)
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I’ve read hundreds if not thousands of posts on Aussie FIRE blogs, and of those some absolutely tiny number have even mentioned insurance. Whenever it is brought up in various forums, the main arguments against it seem to be that it costs money and that if you’ve hit FIRE you don’t need it.
Insurance certainly does cost money. However, no one seems to question paying for insurance on their car or house or contents (although obviously they try and get the cost down as much as possible), but when it comes to protecting their most valuable asset (ie themselves and their future earnings), all of a sudden no one wants to do it.
Having insurance on a $20,000 car, but not on 40 years of earning $80,000 a year (so $3,200,000) makes absolutely no sense to me. And if you get insurance when you’re young and healthy then it’s going to be pretty cheap anyway.
I do agree with the argument that you probably don’t need insurance if you’ve already hit FIRE. But given the majority of bloggers and presumably even more of the readers haven’t actually hit FIRE and aren’t overly close, most people still need it.
Certainly, as you build up your wealth over time and are getting income from your investments you can reduce the amount of cover you have till it eventually can go to zero, but if you’re not close to hitting FIRE, well then you need insurance.
I talked about some of the basic stuff in this post – FIRE and Personal Insurance – which hopefully gives people a better understanding. But really as the post says, people need to go and see an actual professional about this sort of stuff, so that if something does happen to them, they’re going to be ok financially.
(You can find more by Aussie HIFIRE on his blog here)
If you’re like me, you’re on this incredible journey to reach Financial Independence/Retire Early (FIRE) because you value the opportunity to contribute to society on your own terms. Because you would prefer to spend more time with the people that mean the most, you value true wellbeing and because you strive for balance.
But the journey is not an easy one. There is no magic tool to tell you the best way to invest your money and no special calculator to clarify what will be the exact date, month and year you will finally reach the goal.
I don’t find difficult the times when I’ve watched my share portfolio drop by thousands of dollars in one day, or even parting with my video game collection in exchange for a Gumtree sale of $700.
In fact, what has been most taxing is trudging through the constant monotony of full-time work, year after year, in anticipation of a very different life in the future.
It is amazing that after a time your mind can start playing tricks on you. If you allow it, your mind will convince you that you have it particularly hard – that you do not have enough time or money and you have a hard lot in life compared to your peers. But in reality for the vast majority of us, this is simply untrue.
Compared to other places and times in history, life is generally the best it has ever been. We have more free time, more freedom, better access to health, more material wealth, more advanced technology, better education, more information, less violence, more stable and peaceful societies and virtually any other objective measure of human wellbeing that you can possibly conceive of is at an all-time high in the developed world of 2020.
Despite all this, I can still feel pretty shitty as I roll out of bed on a Monday morning and pine for just one more day off on the weekend. Some may feel that the budgeting they are imposing upon themselves is too restrictive, or that they really deserve to reward themselves with that showroom Hilux.
Maybe the prospect of another several years in the rat race can really get you down. When you know that there is a big world out there to explore and the temptation to buy a new toy to temporarily transport you out of this reality is all too much to resist.
So my message is to enjoy yourself along this challenging, but very privileged journey to Financial Independence. Practice gratitude for how great things actually are and learn to enjoy your work and your life, including its struggles (in my case, however minor they may be).
Reminding myself of this is a cornerstone to help me truly appreciate what a fortunate and rich position I must be in, that Financial Independence is even a viable option in my lifetime, and makes the journey that much better.
Here’s to 2020 being another year which is better for humans than the previous several million.
(Shuffle through more of Pat’s work on his blog, Lifelong Shuffle)
While I tend to avoid talking politics on my blog (because it would be a lot of angry ranting!), one thing I’ve learned, even before discovering the FIRE movement, is that politics matters.
When I was younger, I paid no attention to politics – what could any government, Labor or Liberal, really offer someone who is single, child-free, generally robustly healthy, and in secure, permanent employment?
I felt this way for a very long time, and then the Liberal Party in Queensland, headed by “Can-Do” Campbell Newman, won state government in 2012, and I discovered that ignoring politics was a sign of my level of privilege. I touch on what this period was like in this blog post.
Whether you’ve reached FI or are still pursuing it, governments giveth and governments taketh away. Who knows what the future will bring for vehicles that are currently given favourable taxation treatment?
I fully expect that the goalposts will continue to move for superannuation, regardless of who is in power. Already the concessional cap on voluntary super payments has been halved. If I was a young pursuer of FIRE, I’d be putting only the minimum into super and investing more heavily outside of it.
And for those of us who are still working as we chase our FIRE goals, it’s important to understand the parties’ policies, not be led by the nose by a media machine that focuses on the personal characteristics of the party leaders.
There has been a noticeable push in recent years to turn our politics into a popularity contest, rather than recognise that it is the party that governs, not the Prime Minister. And the other reason why political awareness is valuable – the people that we rely on for our employment and social security pay attention, and their interests are usually in conflict with our own.
When you’re single with no one else in your life for financial back-up, knowing what your government plans for you is essential.
(See more at the FIRE for One blog)
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I used to worry about starting new projects, or asking people to pay me for things I didn’t feel I had enough experience in.
“You aren’t an expert, why should people listen to you, why should they trust you, why would they pay you?” These thoughts ran through my head often.
It meant that I stalled and didn’t start something. I put things off and thought, “one day when I have enough experience, or qualifications I’ll give it a go.”
When you want to start something new, there is always someone who seems to be naturally talented in that area and many others who have far more experience. This can be overwhelming and make you feel like you shouldn’t even bother.
If there is one thing I want you to remember in 2020 it’s this: there is enough room for everyone!
No matter how talented you are, or how much experience you have, there is always more demand than one person can fulfil. Put your name out there, show some enthusiasm, be passionate and genuine – people will give you a chance.
If you don’t know how to do something, learn from others who do, read some books, do some research and get hands on.
Most importantly, when you commit to something, make sure you show up.
Before you know it, you’ll be the person who everyone turns to. And lastly, a quote that seems to sum up what I’m trying to say in a much more eloquent way….
“Things will grow out of the activity itself and you will, through work, bump into other possibilities and kick open other doors that you would never have dreamt of if you were just sitting around looking for a great idea.” – Chuck Close
(You can read more from Miss B on her blog, All About Balance)
The start of the New Year is a good time to set new financial goals and review progress. I also always review my superannuation – log into my account to check that:
a) employer contributions have been deposited, and b) the correct amount has been contributed – including any salary sacrificing amounts.
These will show as having been deducted or contributed into super on your payslips. But unless it is deposited into your super account, it is still sitting in your employer’s bank account.
If you are planning to contribute the maximum ($25,000) into super this financial year, as I am, then you have 6 months to adjust contributions and spread it out if needed. I always recalculate salary sacrificing amounts to make sure I am on track to contribute the maximum (and not a cent more).
This is especially important if your salary has had an adjustment – up or down as per your circumstances.
(You can check out more perspectives on FIRE for late-comers at the Late Starter FIRE blog)
If you’re super excited about achieving FIRE, chances are you’ll want to start making massive changes right away (like the family in the Playing with FIRE film).
I personally prefer the approach: Start small but be consistent. That’s the best advice that I’ve received from a mentor of mine. Funnily like all good advice, it applies to everything, including personal finance!
There’s no need to go all out and cut your spending in half to achieve a 50% savings rate right away. Good habits take time to take root.
Perhaps start off with giving up a bought coffee every Friday. Or take up Meatless Mondays. Keep doing that for as long as it takes to become second nature. Then add on the next habit.
The same approach can apply to saving or investing. If you’re uncomfortable with pumping $1,000 a month into the sharemarket (admittedly it’s a rather large number for someone just starting out), start small. Maybe invest $200 a month, and increase it over time.
You’re less likely to experience burnout this way. Maybe you’ll even have a bit of fun along the journey!
(You can see more content by Ms FireMum at her blog, A Family on FIRE)
My advice for the year ahead for those seeking Financial Independence is to make a start, exactly where you are now.
This could be simply investing an extra $20 a week if possible, or committing to investing a percentage of your income. Measure that progress with a benchmark that’s relevant to your circumstances now, and which you can see material progress on over weeks and months ahead.
It does not need to be the perfect goal, measure or step. The most powerful force to assist you is time, and the energy that results from taking action, not making an elusive ‘perfect’ choice in three months time.
Through my FI journey to date I have collected and discarded many measures of progress, many investment products, but focused on consistently taking small steps forward. No single investment choice or measure drove progress. Rather, it was the continued commitment to take specific actions and learn.
The most important actions through time will change – from initially minimising costs and building a capacity to save, to finding the right low cost investments, to managing emotions and patiently staying the course.
Progress is compounding – and the power of compounding investment returns and the habit of consistent actions and learning is almost unstoppable.
(You can follow the explorations of FI Explorer on his blog)
I am sure most readers of Dave’s blog are familiar with Peter Thornhill and the chart below. The graph shows the stock market the way Peter sees it – a straight line between the start of the market and where it is today:
I am a big fan of Peter’s work, but my message for 2020 has nothing to do with investing.
Whenever I see the the graph in the chart above, I have to think of a very similar looking one that I feel we should all think about a little more. It is possibly the most important graph of all. It is the graph of years left in your life.
And in contrast to the share market, which always goes up over time (as illustrated by Peter’s chart), the graph of years left in your life only goes in one direction – down. This is what most of us may expect our life graph to look like:
Life is short. Most of us in the FIRE community realise how precious each year in our lives really is. We see this as a major motivation to pursue FI.
FI allows us to buy back years we may otherwise have spent in a cubicle. It enables us to work less and live more. Ironically, many of us then go on to spend the next 5, 10 or even 15 years, dedicating all of our time working extra hard to reach FI.
Life becomes all about savings rates, frugality and side hustles.
When I read posts in FI discussion groups or blogs I often notice that people seem to put their lives on hold and put other goals, projects and travel plans off until they hit their number.
This would not be a problem if the performance of the life graph above were guaranteed. Unfortunately, there are no guarantees in life.
We don’t know when our personal graph will hit zero. What if our graph ends up looking more like this:
We all hope that the point at which our graph hits zero is a long time away, but we just don’t know what the future holds for us.
The start of a new year (and a new decade!) is a great time to reflect and take stock. Here is a question I have been thinking about a lot lately:
If my life timeline ends up looking more like the second than the first graph – will I have any regrets? Is there anything I’d wish I hadn’t put off? Anything I’d wish I had done more of?
I encourage you to answer this question for yourself. If your answer is “yes,” it might be a good idea to think about how you can make some changes in your life, even if they don’t make total sense financially.
Could you move to part-time work to spend more time with your kids? Drop the side hustle to pursue a hobby? Take a few months off and take that trip to Europe?
It is very tempting to tell ourselves that in just a few more years, we will have reached our goal and THEN we will spend more time with our families and tackle the project we’ve been thinking about. However, the years it takes to get there are likely some of our best years.
Does it really matter if you reach FI a few years later if it means that you can do more of the things that are truly important to you right now? Of course not.
My message for 2020 is simple: Don’t put our life on hold in the pursuit of FIRE. It’s too risky.
(See more at Money Flamingo’s blog here)
FIRE is pretty straight forward once you know the basics. Spend less than you earn, invest the rest and eventually, you’ll get to Financial Independence.
The majority of our community focuses on the investing part because I guess that’s the most exciting. But if this year has taught me anything, it’s what you’ll do once you hit FI that’s a lot more important. To me, this means figuring out what you want to do in retirement.
Putting more thought and effort into what you want your retirement to look like is often neglected. Once upon a time, I thought simply reaching FI would make me happier. But after taking a mini-retirement this year where money wasn’t a concern, I can tell you that it wasn’t true (for me at least).
Everyone’s ‘retirement’ will look slightly different, but the key message is to start crafting your life now, so when you do reach FI you can seamlessly transition into the entire point of FIRE, and that is to stop trading your time for money by retiring early from the ‘rat race’, so you can live life on your own terms.
Spark that
(You can check out Aussie Firebug blogs and podcasts on his website here)
2019 has been quite the year for my family. All up, we’ve had 7 major health things happen, ranging from Leukaemia, Pancreatic cancer, a skin graft after a burn and other assorted dramas.
As I’m writing this, a few days before the end of the year, we’re all driving carefully, treading warily and being very cautious while we wait out 2019, when hopefully the ‘curse of the Joneses’ will end.
All of this has brought home the importance of appreciating the people you love, enjoying any time you have with them and the MASSIVE importance of getting your financial house in order.
Financial Independence isn’t just for some dark, misty future when you’re strapping on the socks and sandals and walking off into retirement. It’s for the times when you might have to leave work to become a carer.
It’s about being in a position to drop everything and to rally around a loved one in need, without having the nagging worry at the back of your mind about how you’ll make those mortgage repayments or credit card bills.
It’s having the peace of mind that security brings so that you can put all your focus on the people who need you, rather than worry about the messiness of debt.
Having Financial Independence, or a decent emergency fund behind you, is the biggest gift that you can give yourself and your loved ones. It gives you the freedom to do exactly what needs to be done to look after the people you love, instead of trying to juggle them around the demands of your financial obligations.
It’s totally worth the little sacrifices you have to make along the way to get there.
(See more from Frogdancer Jones at her blog Burning Desire For FIRE)
Wow, Iook at the contributions from these thoughtful people here! For Aussies looking for guidance and inspiration during the quest for FI, you’re clearly in great hands!
At this point, there’s really nothing to add. But here’s what I’ve noticed: everyone has something to teach.
That doesn’t mean you should seek out every possible opinion you can find. Because then you’ll end up doing nothing but consuming information without actually, you know, doing something!
What I mean is, be open to new ideas. I’ve said this before but it’s important. If I never stopped to honestly question property investing and consider shares as an alternative, I’d very likely still be stuck in full time employment today.
So, it’s not too dramatic to say that learning one new strategy or concept can change your life forever (like when each of us first learned of Financial Independence).
But we also need to acknowledge we’ll never know it all. There’s always more to learn. Taking a big picture view, aside from the key factors of a strong savings habit and low cost diversified investing, the rest is simply details.
So we need to acknowledge this and like FI Explorer said, have just ‘enough’ knowledge to take action. And with the rest of our time, spend it very wisely. On important things and important people. Rather than getting bogged down in perfectionism and over-analysis.
Now it’s over to you! The start of the year is a great time to start building new habits. So come up with a few simple actions you can take this month to get the ball rolling and start building your future freedom!
I really hope you enjoyed this Epic Roundup Post. Please share it if you did. Thanks for reading, and wishing you a great 2020!
Why deliberate spending is my favourite money management style. What it really means and how you can use it as your situation and priorities change over time.
My thoughts on ‘The Great Taking’. An idea that the masses will lose untold amounts of wealth in the next financial crash, due to a deliberate plan by mysterious figures.
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So much to agree with here!
Thanks for including me. It was an EPIC read.
🙂
No worries, thanks for being part of it! Some great reminders in there and a lot of thoughtful advice 🙂
It’s great to see this post up, Dave; thank you so much for including me! Looking at the other contributors, I feel deeply honoured to be amongst such exalted company, especially as I’ve only been blogging for, hmm, must be 8 months or so. Everyone here has such great advice – what a wonderful collection of perspectives.
Definitely a great bunch of bloggers in Oz these days, which is fantastic! Thanks for contributing!
This is an excellent post.
Thanks The Joyful Frugalista. I look forward to a post in which you talk about how you crushed the mortgage monster.
Thanks Aussie HIFIRE for sharing your thoughts on insurance.
Pat the Shuffler, I have myself experienced that it is mostly in our mind. I have myself not done things because my mind convinced me that it is too hard. I don’t listen to it too much now.
FIRE for One. I have felt that politics is ignored till the time policies do not effect us as an individual. It is also wise to look beyond media and go to the sources directly.
Miss B, so true. Your words remind me of a quote I once read “Vision without execution… is just hallucination.”
Late Starter FIRE. After reading your post, I logged into my super account. A lot of work needs to be done there 🙂
Ms FireMum. You will find this article interesting https://www.fool.com/amp/retirement/2019/12/24/this-secretary-amassed-82-million-heres-how.aspx
The FI Explorer, I can’t remember when it was but not too long ago I gained genuine appreciation for compounding. It was only after 10 years of diligent investing when I started seeing sizable returns in my portfolio. I was and I am convinced.
Aussie Firebug, this is something I think about a lot.
Frogdancer Jones. I hope things get better in this year.
Awesome reply-comment. Great to see you enjoyed it Mr D 🙂
Some excellent big picture advice here. I love Flamingo FI and Frogdancer’s messages, very powerful!! The bush fire emergency in VIC and NSW puts things in perspective and makes our personal struggles and goals seem insignificant. Keep safe everyone and don’t forget to enjoy yourselves in 2020!
Cheers for the comment Jo. Like you said, keeping this stuff in perspective is super important.
Thanks for putting this together, Dave! I really enjoyed reading the finished product! 🙂 It’s nice to see so many interesting perspectives, I think there is something here for everyone!
My pleasure Mrs Flamingo! The thanks really goes to you guys though for doing the hard work and providing the great insights 😉
What a fabulous way to start the year. Thanks Dave.
We have some serious food gardening and preserving goals this year as well as now officially counting down to FIRE …. only 48 months to go. It just goes to show that even a couple of late starters can turn things around.
Happy new year to you and Mrs SMA.
Thanks Phil – Happy New Year!
Wow that’s getting into excitement territory there, not long at all. Nice work indeed.
Great to read everyone else’s top tip for heading into 2020.
Thanks for including me, it was hard to narrow it down to just 1 thing, though as you say, too many options can lead to inaction.
With all the great ideas here, I hope your readers can take away a couple and set themselves up for success this year an beyond.
I definitely think everyone will have at least one or two things to take away from the post. Your contribution was one of my favourites to be honest, as I tend to over-analyse things and procrastinate instead of taking action 😉
Thanks for being part of it Miss B.
EPIC post indeed, Dave! Thanks for including me. I absolutely LOVE all the wise words and perspectives from everyone – may 2020 be an EPIC year for all as we edge closer to our end goal of FI
Haha no worries at all! Definitely turned out to be an epic post alright! Great content from everyone involved.
A lot of wisdom here and great well-rounded perspectives. Thanks for pulling this together Dave. There’s a great heartbeat in the Aussie FI community
Glad you like it Craig. The community is definitely building and set to only grow stronger in 2020!
A great post to start the new decade Dave. So much here to contemplate, particularly with bush fires raging everywhere. Thanks to all.
Definitely some timely words about what’s really important in life that’s important to remember. Thanks Girt.
Wow, this is indeed an EPIC roundup. Thank you so much for sharing.
Haha yep it’s a monster! Thanks Serina for taking part 🙂
Thanks for putting this together and giving me the opportunity to contribute Dave, it’s great to see so much fantastic advice from the Aussie blogging community and so varied as well!
No worries mate, thanks for contributing! Totally agree, I was really impressed with the thoughtfulness from everyone.
Now this is what I’m talking about! Awesome collab with these guys Dave. It’s like the who’s who of the FIRE community 🙂
Cheers Linc, happy you liked it mate.
Thank you for your Blog Dave, inspiring and informative.
I have been thinking about financial security lately, above Aussie HIFIRE talks about Insurance , but a little different slant to what I was thinking. I guess the definition of security is different for many different people depending on how you look at it. Is it the portfolio worth or the dividend reliability etc?
I have been reading Tony Robbins “Money, Master the Game” and he talks about your portfolio having a bucket allocation for security. The book is US focused however when you wade through half the crap there is some interesting concepts in the book. Tony’s book is around building an income stream for retirement based on similar FIRE concepts, however in his asset allocation buckets he recommends having a % Bucket for Growth eg. indexed ETF’s or LICs and a Security bucket % made up of Bonds. What are your thoughts of Bonds, or Vanguards Bond Index fund?
The book includes interviews with John Bogle (a founder of Vanguard) and some other reputable boffins from the financial realm. They all seem to have some kind of bonds in their portfolios. Would you think LIC’s, tending to be more stable than ETF’s, would be in Peter Thornhill’s security bucket (if he had one)?
Thanks Mark!
I’ve read that book but didn’t get much out of it to be honest. Bonds and cash can be thought of as similar ‘safety buckets’ in a way. Ideally these are very low risk government bonds or high interest savings/offset accounts which are more popular in Australia. I think either option is fine.
Shares, whether LICs or ETFs are the ‘risk/growth’ bucket, and cash/bonds are the ‘safety’ bucket. If living off income flows, LIC income will be less volatile of course, but they still sit firmly in the ‘risk/growth’ bucket in terms of investment type. So regardless of how much someone thinks they’re secure or safe, they’re a risk asset like all shares. So whatever shares one chooses (index, LIC, direct stocks), it should be paired with a safe option (cash/bonds) in an amount that suits someone’s specific circumstances for retirement. Those are my thoughts anyway, hope that helps.
Thanks Dave, appreciate the feedback
Thanks Dave, good feedback. Im not sure the book would be on the top of my recommendations either 🙂
Cheers
Mark
One awesome round-up Dave! Thanks for putting it together. We’ve shared on our channels.
There’s some truly great advice here!
Cheers Kurt, it turned out great for everyone I think. Thanks for sharing!
This may honestly be one of the best blog posts I have ever read (and trust me, I have read a lot)! There is so much good advice in here and I particularly love that it came from some great Aussie bloggers. I will definitely be referring back to this post on a regular basis! Thank you for sharing this.
That’s great to hear, thanks very much! Totally agree, we’re pretty fortunate to have such a thoughtful and insightful bunch of bloggers here in Oz.
It’s wonderful to have so many great Aussie FI bloggers presenting their perspectives. Thanks for the roundup and here’s to a prosperous and healthy 2020 and beyond.
Absolutely Mich. All the best for the year ahead!
Nooo, wait, stop, slow down….. You’ve just introduced me to wayyyy too many new blogs I now need to read. I’m still working my way through your back catalogue (slowly getting there)!
Seriously though, some great perspectives in there. Thanks to everyone who contributed!
2020. It has been. A year. Thanks for sharing this, a load of awesome new blogs to put onto my radar. I cant believe how much awesome content there is online about this. We need to run an Aussie FIRE get together!