Please note: Ultimately content in this post (and blog overall), is just my opinions, approach and/or thought process. This is personal information, and should not be counted on as financial advice.
One thing I I have found really inspiring is blogs such as Strong Money Australia (with Portfolio Updates) & Aussie FireBug (and his Net Worth updates), and many other blogs from around the FIRE community.
I have been taking a bit of a a background/lurker approach to FIRE over the last 6mths or so, but have now decided to start sharing my own experiences (hence the start of this blog).
So now I find myself excitedly starting to track my own Net Worth, as I start out on this journey… I have downloaded the Google Sheet template from Aussie FireBug for Net Worth (at the bottom of the page for his Net Worth updates), made a few tweaks and thought I would be interesting to start to track this myself.
Laying the foundations, 15years in the making…
As I type this, I am in my mid-30s, and to be honest I used to spend almost everything I earned on nights out with mates, paying my minimum repayment fees on my credit cards and other general living expenses in my 20s.
I was not a saver by any stretch of the imagination.
But I was fortunate enough to always have full-time work in a variety of call centres, where I leveraged skills that I learnt and always looked for the next step up or across on the ladder of employment.
As a result, I slowly but surely moved up slowly over four years from call centre operator to a part-time call quality coach, then to a team leader – with the help of some really great mentors and friends.
Best advice in my 20s?
Somewhere in my drunken/spend-easy early-mid 20s, I heard two pieces of advice which really resonated. Now they might not be relevant to everyone else’s situation. But for me personally, it felt poignant. And in retrospect have set me up for where I am today.
Paying down the debt…
Number one, was about avoiding only paying the minimum monthly repayment on credit card(s).
This really struck home when I took the time to realise how much money I would pay in interest and how long the minimum repayments would take.
Needless to say, it really pissed me off that I would end up paying so much in interest to credit card companies. And even though it felt like a wall of debt that was insurmountable, I plotted and chipped away at it and kept chipping away at it.
One of the tools I used was a ‘debt thermostat’ on my fridge… A simple drawing which showed my progress towards paying down the debt.
I then used a combination of balance transfer promotions and personal loans to reduce the overall interest rate from ~18-25% (depending on which card) and rolled various higher interest rate debt into lower interest card cards/loan.
This was a bit risky to start, as it meant I had to be very disciplined to ensure balances transferred with offers, where paid off before the promotion finish. Because most offers from banks back then, would actually backdate interest on any balance outstanding :-(.
And the amount I could get for new cards initially was limited, and it really just felt like I was just moving money around. But the strategy worked for me and gradually got me out from underneath the debt, to the point I had a credit card and was able to simply pay it off in full each month.
To where I am now, where I have consciously closed all my credit cards/loans.
Shallow Pools of Super….
And the second piece of advice that stuck was about combining my various super funds into a single fund.
I don’t know where/how I heard these nuggets of advice, it may have been something from a Money magazine or overheard in a conversation. But I remember it just ‘sticking’ in my mind…
Though by doing this, it allowed me to firstly combine all the money saved in super (albeit not much) into a single pool. To actually read the PDS’s of the various funds I had to understand the fees, and then to plot out which one was most cost effective for me. With the aim of avoiding paying multiples of the 1-5% fees (plus for multiples of insurances like TPD & Income Protection in each of them).
On top of combining my super into a single pool, one of the new positions I took at my work came with a reasonable bump in salary. So I decided to start banking that for the long term.
Building for the future…
I had my debt starting to come down to manageable levels, so I decided to take advantage of a dollar for dollar match my company offered for super contributions (up to 3% of your salary).
So on top of the standard 9.5% Super Guarantee (which is the mandatory minimum super contribution, made on your behalf by your employer) – I was also sacrificing 3% of my salary into super, with an additional 3% being matched/added by my company. Giving me a 15.5% contribution into Super (9.5% + 3% + 3%).
Now I wasn’t earning huge amounts of money in salary, but I was middle of the road and keen to start putting in some extra while I was in the position to do so.
When I moved to the UK for 6 years (from 2012) to further develop my career, there was a few years where nothing was going into Super/Pension.
But in my last role there before moving back here to Aus, I was working at a company which had a similar matching offer for pension (up to 5% if you had worked there for 3+ years). So as soon as I hit the 3yr mark I ramped up the salary sacrifice to take advantage of the match offer (and then some).
This time it was 5% from the company. But I was also very fortunate to be on a very decent wage. Which meant I was able to salary sacrifice a lot more (15%) from my own pocket without noticing it.
What’s this got to do with Net Worth?
Why am I mentioned all this? Well it is all relevant to my first Net Worth update below… Those lessons at the time, felt painful and I hated reading through PDS’s and having to learn discipline towards paying off debt.
But now I have started to track my own Net Worth for last couple of months, I find myself looking back on those two decisions as potential game changers for later in life. Although probably not going to help me ‘retire early’, it will help me to retire.
Now, I am also only just starting to build my personal portfolio up (ie outside of super)… But because of past actions it has helped build a decent foundation to really start to accelerate as I get more and more into being part of the FIRE community.
So with a bit of good luck, hard graft and perseverance I am actually looking forward to the future. Saying all this, I also realised with a bit of good timing, that I hit a big personal milestone.
My Australian Super hit the $100k threshold this month… Even though it is balance I likely won’t be able to touch for a long time to come, it really felt a bit exciting to see the big $100k number being hit.
Most of this was on the back of the overall market rally over the last couple of months. And with my UK Pension above $50k, I really feel like I can now focus on accelerating the FIRE side of things.
Down to the numbers
As mentioned above, the template I used for this was sourced from Aussie FireBug. I love some of the graphs in the Net Worth tracker and it has made this quite an interesting and exciting way to dig into some of my own personal numbers…
Overall Net Worth Breakdown
At the moment my personal savings / portfolio (outside of Super/Pension) is really just in its infancy… But with that said, let’s to a look.
Overall, what is in the Super/Pension side of the equation has really started to accelerated over the last 2 years – due to the additional salary sacrifices mentioned above.:
Here is a breakdown of the assets, as you can see, Super/Pension makes the lion share at the moment:
If excluding Super, the breakdown of assets is still building.
As I have only just started. this isn’t the % splits (for diversification of assets) I am targeting.
But as I save my $$$, and then every 2-3 months buy additional ETFs/LICs – I am hopeful this balance will shift to more closely resemble my targets.
Debt paid off, finally…
Personally, I don’t have an investment properties or margin lending, but my estimated Value vs Debt for me was eye opening. With the estimated Rolling Value for previous year coming from my Super account primarily (as previously mentioned I haven’t really save much $$$).
And the debt over the last couple of years, was what was left of the ultimately bad debt (credit card/personal loan) – which is all paid off now. Finally!!
Let’s build a Portfolio
Next up, my share portfolio is still very much in its infancy. I had started with specific stocks (like Westpac), but after some research and reading quiet a few FIRE blogs, I have actually re-defined my portfolio strategy towards ETFs.
Additionally, the recent management fee price drops by Vanguard and Blackrock for ETFs and higher value of the individual stocks I had bought also helped that decision along. So I sold the individual shares (after they went ex-dividend) and sold to make a profit albeit very small one, and to to switch into ETFs to get ‘instant’ diversification.
And now this portfolio is made up of ETFs and LICs, which cover the ASX, Gold and Bond assets.
So overall, I am a little surprised/happy with how things have ‘started’.
It has been years in the making obviously, but without actually tracking it – I had no idea where I really was. So I have now base-lined it at least, and look forward to building up the portfolio, outside of super.
The next few years will be key, as I look to other investment/asset types too. And really start to focus on becoming Financial Independant (maybe not so much on the ‘retire early’ side, just yet)…
Though for me personally, progress may be a little slow in the short-term.
Moving back to Australia, I decided to start my own business in the field I work in.
So there is a lot of moving parts at the moment, and becoming self-employed (without being Financially Independant) is and has been a scary step… But it is all with eyes on the prize for future success (hopefully professionally and financially).