Author Topic: Case study: Frugal in Australia... Taking the next step - where to now?  (Read 5931 times)

frugalsurfer

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Life Situation: Living in a major Australian city (and money shown is in $AUD), Late-20s, healthy, no dependants (or plans to create any), I have a long term partner but I'll keep this focused on my own specific finances (she's also frugal though and on-board with retiring early)

Gross Salary/Wages: $65,000 AUD per year inc travel allowance, plus 9.5% additional superannuation contributions

Other Ordinary Income: About $3,000 pa from savings interest

Adjusted Gross Income: approx $68,000 pa (a fairly average wage in an Australia city)

Yearly net income (after tax): ~$51,500 after tax

Taxes: ~26% (applicable after $18,200 tax free threshold reached)

Current expenses (in order, yearly, all $AUD):

-Rent: $11,440 (my share is $220 per week for a small apartment close to the beach but far from work - a compromise I considered extensively. I have recently listed our spare room to sublet, but haven't had any success finding a suitable person as of yet update: now have a tenant, but it's only short term)
-Groceries and household goods: $4,160 (about $80 per week, all fresh plant-based food and I always make leftovers to bring to work for lunch)
-Car expenses: No repayments; bought a good condition, used Toyota Corolla with cash, comprehensive insurance $800, yearly license fee $650, fuel $1560 (about $30 a week, as I rarely use it other than camping/road trips), servicing and maintenance approx $400 yearly (most servicing I do myself) total about $3,410
-Leisure travel: $3,000 each year, a big 2-3 month trip every year or two (many long trips in Europe, Americas and Australia and worth every cent. I always do it on the cheap, stay with family and friends, couch surf, secure deals where possible, use public transport or buy a car, sleep in it and resell at the end of the trip etc)
-Commute to work: $2,574 (weekly discounted train ticket, $49.50 per week)
-Utilities (power, water and home internet): $1,300 ($25 per week)
-Tech: $1000 (I buy 2nd hand where possible and resell when I no longer use it)
-Sports equipment: ~$400 (I get a lot of use from my surfing and cycling gear and often have to replace worn or damaged equipment, I always wait for a sale)
-Phone plan: $300 ($25 per month, post-paid, no-contract unlimited plan)
-Eating out: $200 (we rarely eat out, as it's expensive and we make better, tastier plant-based food at home anyway)
-Clothing: ~$200 (I infrequently buy good quality clothing and footwear for hiking/cycling when it's on sale and make it last, or thrift clothing for regular use)

All up, around $28,000 in expenditure on average, per year

Assets:
$106k in a high interest online savings account (generating ~3% pa variable)
$18.5k in superannuation (has about $5,800 after tax added per year), essentially locked away until a set retirement age of 60, can be accessed earlier in special circumstances after jumping through some hoops

Liabilities: approx $30,000 government student debt remaining (no interest or other fees, other than being adjusted for CPI inflation yearly). I was paying off about $250 a week in the past, but I am not earning enough in my new job to reach the threshold.

Specific Question(s): As the title suggest I have always been a very frugal person, lifelong bicycle rider, and wary of obscene consumption. Despite my humble, country childhood teaching me the value of the simple things, I also missed out on lessons on how to make money work for me. Essentially I am really good and not spending needlessly, at saving money and reducing expenses when it is necessary etc but now I am at a point in my life where I don't know what to do next.

I want to be retired or semi-retired in the next 10 years. I really hate working full-time in an office, which is why I have taken mini-retirements every year and gone for a long trip. I have a moderate amount of money saved, no debt (my student loan isn't a worry as it's interest free), no loans, bad habits etc.

At the moment I am looking to save around $23,000 each year. Even if I was able to buckle down and keep working a professional job that I really don't enjoy and constantly dream of leaving, I will have less than $500k in savings and no house or other solid assets by the time I am 40, even if I take into account pay rises and promotions (if they occur).

The best case scenario is finding a way to significantly reduce my living expenses, especially rent, so I can kick out sooner than later and live off the returns. On this note I am looking into buying a van and living out of that, or securing a position in a intentional community/ housing co-op with base-level, lifetime leases at affordable rates.

Frugality is part of my lifestyle, I don't see anything unusual or unpleasant with owning a economical car, riding a bicycle for local trips or errands, buying clothes from a thrift store etc. But what I really want to do is get out of the expensive city, office jock rat race, consumer, car-clown madness as soon as possible and on a permanent basis (not just the 2-3 month escapes that I've done in the past). To be honest, I don't think I can last another 2 years, let alone 10.

To do this I need to go 'next level' to accelerate my income and generate a higher return from my savings than what they are currently producing, although I am aware they are significantly more profitable than savings accounts in the US. But when I look at other options to generate higher, but still reliable, ROI the subject leaves me feeling dazed and confused. I've looked into P2P lending (still relatively new in Australia) and investing but from what my research showed the returns would be only slightly higher than my high interest savings account, more risky, and far more inconvenient.

Apologies for the rant. I'm just fed up with watching my savings accumulate so slowly despite my careful frugal nature, and having to spend 50+ hours a week in the office or stuck in a crowded train carriage with the light at the end of the tunnel so far away still.
« Last Edit: October 27, 2016, 08:32:48 PM by frugalsurfer »

Chris-93AUS

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #1 on: October 11, 2016, 06:30:04 PM »
Hi Frugalsurfer!

I understand your position, its very similar to my own. Kudos on 28k living expenses in a city, that's fantastic.

10 years seems like a long time, especially if you hate your job. But compared to 30+ it could be worse. Think about the poor sukkas you work with.
I'd start looking for jobs in an industry that you would like or alternatively look to move. Sometimes a new location and a smaller/larger? company can make all the difference.

Getting out of the city could reduce your costs as well. I question why you haven't looked at Vanguard ETF's or Lifestyle funds, the dividend income alone is about 3-4% then you have potential capital growth. 10 years is a decent "long term" time frame and you should be able to ride out a recession or downturn with that time horizon.

I like the idea of subletting, get on that asap as it can really help you I think.

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #2 on: October 11, 2016, 06:54:43 PM »
Howdy Chris

Quote
10 years seems like a long time, especially if you hate your job. But compared to 30+ it could be worse. Think about the poor sukkas you work with.
I'd start looking for jobs in an industry that you would like or alternatively look to move. Sometimes a new location and a smaller/larger? company can make all the difference.

Yes this is on the cards. I do like some aspects of my profession, but the daily office grind combined with 3 hours train commuting each day and living in a city on top becomes a bit much some days. My plan at the moment is to suck it up for another year, build my CV (I'm a graduate), and then get out of dodge to a smaller city/town somewhere on the east coast with better lifestyle, reasonable wage and less commuting.

Quote
I question why you haven't looked at Vanguard ETF's or Lifestyle funds, the dividend income alone is about 3-4% then you have potential capital growth. 10 years is a decent "long term" time frame and you should be able to ride out a recession or downturn with that time horizon.

No reason, I had always assumed they weren't available in Aus or not worth the hassle. I don't like the idea of having money locked away in long term deposits though. My current savings account generates 3-4% variable and I can access the money any time with no penalty if I need it to make another investment or emergency expense.

Quote
I like the idea of subletting, get on that asap as it can really help you I think.

For sure. I've always lived in share houses up until now to save money, so sharing isn't the issue. The issue has been finding someone who is compatible, reliable and trustworthy to share a reasonably small apartment with myself and my partner. I've had it listed for the past month but haven't had success yet. Hopefully if I can find someone suitable soon that will cut around $100 a week off my rent and utilities expenses.

Thanks for your ideas and comments.

Chris-93AUS

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #3 on: October 11, 2016, 07:04:28 PM »

Quote
No reason, I had always assumed they weren't available in Aus or not worth the hassle. I don't like the idea of having money locked away in long term deposits though. My current savings account generates 3-4% variable and I can access the money any time with no penalty if I need it to make another investment or emergency expense.

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/productType=retail

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/productType=etf

Exposure to stock markets and their returns is fairly important, I think the retail managed funds give a good diversification for a low fee, or if you'd rather do it yourself you can access the ETF's through any standard Australian broking account.

Having that much cash on hand seems far too conservative for your goals and objectives.
And your money isn't locked away, you can access it usually within a couple of business days if required. I'd follow the advice on the forum and have an emerging fund with 3-6 months of expenses (savings account that you have seems appropriate) and then look to either dollar cost average into one of the funds / build a portfolio via ETF's or invest the balance in one go.

https://www.bogleheads.org/ - Really good resource for understanding passive index funds and how to create a portfolio. I recommend you have a browse :)

HappierAtHome

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #4 on: October 11, 2016, 07:09:19 PM »
A three hour commute is soul-sucking. No wonder you feel crappy about your situation. Do you surf on weekdays, or only weekends? If you're only heading to the beach on weekends anyway, do the math on your current commute time and projected commute time if you lived closer to work - you might be able to free up a lot of your time by making the less regular trip (in this scenario, the one to the beach) the one that's absurdly long, and the trip you're making ten times a week the shorter one.

Good advice already on making your money work harder.

If you don't feel like you can survive another few years, let alone ten, in an office then alternative employment is definitely worth pursuing. Would you be happier in a job where you'd be outside, "doing" instead of inside, thinking?

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #5 on: October 11, 2016, 07:15:53 PM »

Having that much cash on hand seems far too conservative for your goals and objectives.
And your money isn't locked away, you can access it usually within a couple of business days if required. I'd follow the advice on the forum and have an emerging fund with 3-6 months of expenses (savings account that you have seems appropriate) and then look to either dollar cost average into one of the funds / build a portfolio via ETF's or invest the balance in one go.

https://www.bogleheads.org/ - Really good resource for understanding passive index funds and how to create a portfolio. I recommend you have a browse :)

I'll look into it. If I can get access to the money within a few days in the event of an emergency or opportunity that would be ideal. I could put away 90% of my savings without a concern in that circumstance.

misterhorsey

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #6 on: October 11, 2016, 07:19:11 PM »
I just had a quick read of your original post and just wanted to add I think you're doing well and are on track.

I get you about hating the office life. I've done it for 15 years straight and I think I need to end it.  Which is one reason why I am looking for other things to do like reading MMM forums and posting long responses to posts.........

Anyway, the one thing missing, which you've identified, is making your savings grow faster by investing.

The short answer to this is to invest in the stock market via indexes. Average performance of about 7% per annum beats savings accounts and is comparable to the perfomance of well performing property over the long term (without the hassle). Expect lots of volatility in the short term.  Psychologically and emotionally you get used to this (i.e. when I first started investing making a paper loss of  $500 in one day was a bit stressful.  Fastforward a decade and I made a paper loss of $45k in a month and i didn't feel anything, other than wanting to buy more shares).

The longer answer is to read this series to educate yourself about what index investing is, and why it might be a suitable strategy for you.

http://jlcollinsnh.com/stock-series/

It's focused on the US but can be adapted for Australia.

This is a good chart to see performance of different classes of assets over the past 40 years.

https://www.vanguardinvestments.com.au/retail/common/html/microsites/index2015/index.html

https://tool.vanguardinvestments.com.au/volatilityindexchart/ui/retail.html

Ultimately keeping money in cash is allowing it to slowly lose value over time due to inflation.  You also pay tax on all the interest you earn.  So while shares are more volatile, their tax effectiveness (due to franking credits) and their higher growth, makes the volatility worthwhile so long as you're in there for the long haul.

Read lots. Pick a strategy and execute. Don't try and over optimise cos a strategy that is 90% right is better than not doing anything. Good luck and have fun.



misterhorsey

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #7 on: October 11, 2016, 07:20:39 PM »

Having that much cash on hand seems far too conservative for your goals and objectives.
And your money isn't locked away, you can access it usually within a couple of business days if required. I'd follow the advice on the forum and have an emerging fund with 3-6 months of expenses (savings account that you have seems appropriate) and then look to either dollar cost average into one of the funds / build a portfolio via ETF's or invest the balance in one go.

https://www.bogleheads.org/ - Really good resource for understanding passive index funds and how to create a portfolio. I recommend you have a browse :)

I'll look into it. If I can get access to the money within a few days in the event of an emergency or opportunity that would be ideal. I could put away 90% of my savings without a concern in that circumstance.

Give vanguard a call. They are pretty friendly and helpful and very patient with what you might think are stupid questions.  Far as I know you can get your money out of an fund in around 3 days.  If its an ETF traded on the stockmarket it's the same period as any other share.

Anatidae V

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #8 on: October 11, 2016, 07:40:36 PM »

Having that much cash on hand seems far too conservative for your goals and objectives.
And your money isn't locked away, you can access it usually within a couple of business days if required. I'd follow the advice on the forum and have an emerging fund with 3-6 months of expenses (savings account that you have seems appropriate) and then look to either dollar cost average into one of the funds / build a portfolio via ETF's or invest the balance in one go.

https://www.bogleheads.org/ - Really good resource for understanding passive index funds and how to create a portfolio. I recommend you have a browse :)

I'll look into it. If I can get access to the money within a few days in the event of an emergency or opportunity that would be ideal. I could put away 90% of my savings without a concern in that circumstance.

Give vanguard a call. They are pretty friendly and helpful and very patient with what you might think are stupid questions.  Far as I know you can get your money out of an fund in around 3 days.  If its an ETF traded on the stockmarket it's the same period as any other share.
+1. My partner and I opted for the ETF route (ie buying as shares rather than direct into Vanguard), and its very straightforward. We get growth on the share prices plus dividends, as others mentioned. We only just started, and we receive our first dividends this month! I'm super excited. It's much better long term than just bank interest, which won't keep you safe from inflation.

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #9 on: October 11, 2016, 07:42:41 PM »
A three hour commute is soul-sucking. No wonder you feel crappy about your situation. Do you surf on weekdays, or only weekends? If you're only heading to the beach on weekends anyway, do the math on your current commute time and projected commute time if you lived closer to work - you might be able to free up a lot of your time by making the less regular trip (in this scenario, the one to the beach) the one that's absurdly long, and the trip you're making ten times a week the shorter one.

I only moved here for a new job a few months ago, and I spent a lot of time talking to people I knew lived here about options and doing research. Being near the ocean is really important for my well-being, I'm originally from a small, remote coastal town so living in a city is often overwhelming. Essentially, due to limited public transport networks and horrendously congested, anti-cycling roads I had two choices that I weighed up.

First option was to get a small, 1 bedroom apartment right near where I work. This would result in a 20-30 minute total commute each day (ideally walking, or riding a bike if there's some quiet backroads). Additionally there's share cars and plenty of public transport within the CBD area. The downside was that rent is quite a lot more in central areas (on average about $150 more per week), there's rarely a parking space or garage/storage space for cheaper apartments, I'll then be an hour each way from the beach and have to drive through heavy traffic to get there, and also the air quality and noise pollution is much worse in the CBD.

The second option was to live further away from the city, where we could get a nicer, larger, 2 bedroom apartment for the same price as a studio apartment in the CBD. The upside was living 15 minutes bike from the beach which can get great surf, close to national parks, cleaner air, minimal traffic, and still a 3 minute walk to the train station, and a dedicated garage space for the car so we could use it on weekends and go up or down the coast to escape the city. I don't mind the area where we live as it's laid back and family friendly, which is a nice atmosphere even for someone who doesn't have kids. The downside, obviously, is the long daily commute (~80-90mins each way) and the weekly ticket cost.

I am still considering my options though next year when my lease expires. If my partner also needs to commute into the CBD it means that we'll be spending $50 each per week on train tickets alone, plus 15 hours each in transit.

In an attempt to have my cake and eat it, I have recently applied for a local job (they don't come up often) that is equivalent in responsibility, quality and wage, but is a 15 minute commute from home instead. I'm waiting for a response to that, but rest assured I am not just complaining about my situation. I am working towards solutions.

Quote
If you don't feel like you can survive another few years, let alone ten, in an office then alternative employment is definitely worth pursuing. Would you be happier in a job where you'd be outside, "doing" instead of inside, thinking?

I tried this, it didn't really work although I may be able to find a happy compromise in the future. I went from a $80k office job for 2 years, spent a year travelling, and then spent 6 months doing a $30k farm job in a beautiful area of far northern NSW on the east coast. Unfortunately the harsh weather and working conditions, abusive management, lack of security, leave entitlements, and minimum wage meant it didn't work out. I then went back into my profession, secured a new job, moved to a new city and promptly realised why I left my previous office job in the first place.

I definitely am not a house cat; I enjoy researching, designing and building/fixing things. I love horticulture, fixing things, doing my own mechanical and electrical work, building campervans and renovating houses. But I also enjoy 'thinking' work which is why I manage and write for a number of websites. I just cannot tolerate sitting at a desk for 8 hours a day, five days a week doing mostly admin/brainless tasks. I studied my profession because I was told that it would be a good mix of on site visits, customer engagement and office work etc. Unfortunately this hasn't been the case, and it's not just because I am still entry level, even the senior staff members spend 98% of their day hunched over a office desk looking miserable and bored.

I am willing to give my current career path another 18 months to see how it turns out, and if that doesn't stick then I have considered looking into other fields or jobs where there might be a better work balance and resonate with my personality better. As I mentioned before, I am a proactive person and am always looking to improve my situation. Life is too short to spend so many years being unhappy when there are so many opportunities out there waiting to be discovered.
« Last Edit: October 11, 2016, 07:49:01 PM by frugalsurfer »

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #10 on: October 11, 2016, 07:53:24 PM »
+1. My partner and I opted for the ETF route (ie buying as shares rather than direct into Vanguard), and its very straightforward. We get growth on the share prices plus dividends, as others mentioned. We only just started, and we receive our first dividends this month! I'm super excited. It's much better long term than just bank interest, which won't keep you safe from inflation.

Onto it. Won't be today, I've spent enough time furiously tapping away looking busy. So I should really do some work now, as boring as it is. But I'll look into it tomorrow or this weekend and see what they can do.

Has anyone here had experience with P2P lending? I am still interested in the concept and I know MMM had some success with it too. Not sure how reliable or profitable it is in Australia though.

http://www.canstar.com.au/uncategorised/canstar-guide-peer-to-peer-p2p-lending-and-investing/

misterhorsey

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #11 on: October 11, 2016, 07:59:24 PM »
+1. My partner and I opted for the ETF route (ie buying as shares rather than direct into Vanguard), and its very straightforward. We get growth on the share prices plus dividends, as others mentioned. We only just started, and we receive our first dividends this month! I'm super excited. It's much better long term than just bank interest, which won't keep you safe from inflation.

Onto it. Won't be today, I've spent enough time furiously tapping away looking busy. So I should really do some work now, as boring as it is. But I'll look into it tomorrow or this weekend and see what they can do.

Has anyone here had experience with P2P lending? I am still interested in the concept and I know MMM had some success with it too. Not sure how reliable or profitable it is in Australia though.

http://www.canstar.com.au/uncategorised/canstar-guide-peer-to-peer-p2p-lending-and-investing/

Re: Peer to Peer, it's high risk. MMM did have success but he was effectively using his play money, after he's already achieved FI, and then some.

I'm not saying it isn't a viable investment strategy. But its unsecured lending usually backed up by a discretionary provision fund. If you are going to P2P allocate the % of your portfolio to it that you are happy to lose or underperform.

To my mind the higher returns are not significant enough to offset the greater risk to your capital.

HappierAtHome

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #12 on: October 11, 2016, 08:10:36 PM »
I don't think you're whining at all, but I do think it's worth doing the maths to make sure you aren't overestimating the time cost of living so far from work and close to the beach, compared to living close to work and having a longer 'commute' to the beach.

Your current home:
Work commute = 90 minutes x 10 trips per week = 15 hours a week (shoot me now if I had that commute).
Beach commute = 15 minutes x X trips per week = Y hours a week.

The hypothetical apartment you mentioned:
Work commute = 30 minutes x 10 trips per week = 5 hours a week.
Beach commute = 60 minutes x X trips per week = Z hours a week.

The real unknown here is how many times a week you go to the beach.

With a difference of 45 minutes between your current beach commute and the hypothetical one, you'd need to go to the beach 6.5 times a week (13.33 one way trips, I rounded down slightly) to break even on your time compared to the hypothetical apartment near work.

Living somewhere you love is worth a lot, absolutely, but so is not sitting on the train for three hours a day.

Now you might still decide that living near the beach is *totally worth it* for you, which is fantastic! But please look at the maths and take that into account given how awful your commute is and that you've specifically identified that as one of the issues in your life.

deborah

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #13 on: October 11, 2016, 08:27:13 PM »
You really want some boring investment strategy with lower risks, rather than something where you could lose the lot, like P2P lending. People suggest that you could use 10% in more speculative investments (including P2P), but, for now (if I was you), I'd just go for boring investments, and understanding these before branching out.

It is very tempting to do something big, but taking baby steps is a better way to reach your goals.

You sound as if your current career is disheartening, especially as it has turned out to be different to what you envisaged. Is this because your expectations were wrong, or is it that there are those types of jobs around, but you just haven't applied for the right sot of job in your expertise, or, maybe, that the interesting ones are after a bit of experience. I think you should investigate this further, because it is always easier to get something in an area where you have experience and qualifications.

Commuting can be a good way to get extra time for the things you want to do. I used to embroider on the tram each day to and from work, and I found that gave me something for my commuting time, and, each day I knew I had already achieved something by the time I got to work, so I had a sense of satisfaction that oozed into the rest of the day, and made it better. If I wasn't embroidering, I had a list of "tram jobs" that made the time productive (I often didn't get a seat, so I could do a tram job instead). Since you have such a long commute, you probably get a seat each time, so what you could do during your commute is more predictable.

thereserve

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #14 on: October 11, 2016, 08:33:18 PM »
to HappierAtHome

I ditched a 90 min each way commute for a 6 min (by car) commute.

I worked out that my total time including commutes and NOT including lunches was over 38 hours at my previous job. Here's the thing -> my previous job was 3d/w plus a half day from home, and now I work full time.

It's like this:

1.5x6 for 3days/w in the office = 9hrs
4h for my half day from home = 4hrs
7.5x3 for my 3 days in the office = 22.5hours
9+4+22.5 = 35.5hours

OK so it wasnt 38, but still.

Now, it's
7.5x5 = 37.5h
+.1*10 = 1h commute = 38.5

As you may imagine, full time pays better than part time.

The ironic thing, though, is that now I cycle to work and take far longer to commute. When walking it was 50 mins each way and cycling is about half that or better.

But I am far happier being able to get the exercise and to be in control of that commute decision.

Anyhows I ran all this maths after making the switch, which I made for other reasons. But it certainly accounts for my better state of mind these days!

HappierAtHome

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #15 on: October 11, 2016, 08:47:52 PM »
to HappierAtHome

I ditched a 90 min each way commute for a 6 min (by car) commute.

I worked out that my total time including commutes and NOT including lunches was over 38 hours at my previous job. Here's the thing -> my previous job was 3d/w plus a half day from home, and now I work full time.

It's like this:

1.5x6 for 3days/w in the office = 9hrs
4h for my half day from home = 4hrs
7.5x3 for my 3 days in the office = 22.5hours
9+4+22.5 = 35.5hours

OK so it wasnt 38, but still.

Now, it's
7.5x5 = 37.5h
+.1*10 = 1h commute = 38.5

As you may imagine, full time pays better than part time.

The ironic thing, though, is that now I cycle to work and take far longer to commute. When walking it was 50 mins each way and cycling is about half that or better.

But I am far happier being able to get the exercise and to be in control of that commute decision.

Anyhows I ran all this maths after making the switch, which I made for other reasons. But it certainly accounts for my better state of mind these days!

Thanks for sharing, thereserve!

I've read articles before about how much happier people are if they have an active commute (biking, walking) rather than a passive one. Makes sense - gives you a chance to exercise away the stress of the workday, and exercise releases endorphins. Plus biking for your commute still saves you time when you compare it to driving AND getting a workout. You're doing two things at once this way :-)

misterhorsey

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #16 on: October 11, 2016, 08:57:52 PM »
I swapped a 5km cycle for a 300 metre walking commute.  I'm now looking to move house to try and find a longer commute as my fitness has noticeably declined!

Also, one draw back of a short pleasurable invigorating commute is that it makes it slightly easier to put up with a boring/stressful uninteresting job! 

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #17 on: October 11, 2016, 10:59:56 PM »
I don't think you're whining at all, but I do think it's worth doing the maths to make sure you aren't overestimating the time cost of living so far from work and close to the beach, compared to living close to work and having a longer 'commute' to the beach.

I've did the maths before deciding on the area, it still looks like a false economy but I feel it's worth it anyway for the short term. Long term, as I mentioned earlier, I plan to get a local job or move to a smaller city and live close to my new job to eliminate the commute time.

I was car-free and bicycle commuted for six years straight at the previous city I lived in. It was a beautiful 25 minute / 7km ride each way and we had great end of trip facilities. It made life much easier and I saved $$$ doing so in the process, and I enjoyed the daily exercise too. I want to get back to doing that again, but unfortunately my current city is extremely hostile to cyclists and the distances are too vast.

Current situation: living away from work, close to coast:
Work commute: 10x 80 min = 800 min / $50 week
Beach commute: 6x 15 min = 90 min / $0 to ride my bike (I take advantage of my location and usually go to the beach for a surf, swim or walk two or three times a week, including once a week if the weather is nice)
+ Quieter, cleaner air, can go to beach after work during spring + summer, nicer people, larger apartment, less noise, easy access to southern coast, no tolls = $?


Alternative situation: living away from coast, close to work:
Work commute: 10x 15 min = 150 min / $0
Beach commute: 4x 60 min driving or 4x 90 min using public transport) = 240 min or 360 min / $20 + $10 tolls (depending which direction I go)
+ Could sell the car and use bike, transit and car share instead
- Noisier, polluted air, smaller apartment and often no dedicated parking for the same money, will only be able to go to the beach on weekends, have to deal with driving in traffic or sitting on a train


alsoknownasDean

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #18 on: October 13, 2016, 02:33:28 AM »
Actually at $65K you are probably making HELP payments. The threshold is in the mid fifties IIRC. You'll find out once you finish your tax return :)

Is your career something that has opportunities outside of where you are (my guess is Sydney)? It may be worth making the move even if a pay cut is involved (although of course dependent on your partner too). Especially as you're currently spending$2500 a year of post tax money on a train ticket.

Not planning on buying a place any time soon? Would you go part time at work?

I've read articles before about how much happier people are if they have an active commute (biking, walking) rather than a passive one. Makes sense - gives you a chance to exercise away the stress of the workday, and exercise releases endorphins. Plus biking for your commute still saves you time when you compare it to driving AND getting a workout. You're doing two things at once this way :-)

Agreed, I've not been able to ride my bike to work for the last few months and I'm keen to do so again.
« Last Edit: October 13, 2016, 05:21:47 AM by alsoknownasDean »

potm

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #19 on: October 13, 2016, 05:19:28 AM »
You mentioned before that you were on 80k and that this current job is a graduate role?
Did you change careers? Do you like the new one more? From the sound of your posts it doesn't seem like you are.
Can you move back to the old one for higher pay?

There's really no magically short cut. You just have to save more and invest. You can either make more or spend less. Your expenses are already pretty low. Rent is a significant part of it though and you have a spare room. Unless you can get a suitable tenant, that is one way you can cut expenses.
Even with low expenses, something people don't consider is the opportunity cost of time. If you take 3 months off and only spend 3k, that's still a significant cost. Like MMM wrote in an article, if you're not getting rich in your 20s, you're doing it wrong.

As you've identified at the rate you are going, 10 years will not be enough to stop working. Luckily though a lot can be accomplished within 10 years if you make some changes. I would start by investing your money and increasing your income.

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #20 on: October 17, 2016, 03:29:25 PM »
Is your career something that has opportunities outside of where you are (my guess is Sydney)? It may be worth making the move even if a pay cut is involved (although of course dependent on your partner too). Especially as you're currently spending$2500 a year of post tax money on a train ticket.

Yes, there are some limited opportunities outside of the capital cities but I currently lack enough experience to apply for these opportunities. My plan is to accrue as much experience as possible and either obtain a local job, or move out of the city to a more desirable area with less commuting.

My partner also has minimal experience and has a profession where most, but not all, of the employment prospects are in larger cities.

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Not planning on buying a place any time soon? Would you go part time at work?

No, simply because of cash flow and security. As you're probably well aware the trend in recent years of employing new staff on fixed term contracts, plus the unsteady economy, means making a large financial commitments near impossible. Especially with a housing bubble in most Australian cities putting even entry level properties out of reach, especially the big three!

I would like to ultimately buy an apartment to have as a rental property, and have a block of land to live and build on once I have a secure source of income either a local, permanent professional job (part time ideally!) and/or my own source of income through my business side-ventures.

I don't mind working in the office, I just hate the long commutes and high rent of the city, and working long, full-time hours. Being able to move to the country and go part time office and part time doing my own thing would be a really nice situation and it is one I have kept in mind and have had my heart set on for many years.

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #21 on: October 17, 2016, 03:47:05 PM »
You mentioned before that you were on 80k and that this current job is a graduate role?
Did you change careers? Do you like the new one more? From the sound of your posts it doesn't seem like you are.
Can you move back to the old one for higher pay?

The situation was I was desperate for work when I finished my tertiary studies so I took the first job that would take me, even though it was only a semi-relevant field. The job was horrifically boring, but they had an older workforce with lots of retirements so I quickly got promoted and ended up in a position that I was vastly unprepared for /inexperienced but stuck at it as long as I could tolerate because the money was good. I was saving over $1000 a week during that time which is where most of my current savings comes from.

But I eventually left as the boredom and divergence away from my chosen career was dawning on me. I then had a mini retirement and travelled for a time, and then had an opportunity to return to my profession and approach it from an entry level allowing me to start small and build my way up. But alas, it turns out office work is cripplingly boring no matter what the title. Go figure.

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There's really no magically short cut. You just have to save more and invest. You can either make more or spend less. Your expenses are already pretty low. Rent is a significant part of it though and you have a spare room. Unless you can get a suitable tenant, that is one way you can cut expenses.

I agree for sure. I've recently secured a tenant, so about 50% of our current rent and utility expenses will be covered by that person while they're with us. It's not ideal and I've been sharing for many years, but it does help financially so I'll make it work for the moment.

I've also considered dumpster diving or getting left over/seconds for free/cheap from the local markets and produce stalls. That should cut the weekly food bill in half at least as we both follow a whole-food, plant based diet. The reason I haven't done it? Mainly lack of experience/knowledge of where to go and when, and also convenience/time. It's easier to just ride my bike to the local grocery store, buy my weeks worth of food in one go, and go home so I can get on with my weekend and enjoy my two days of freedom.

Quote
Even with low expenses, something people don't consider is the opportunity cost of time. If you take 3 months off and only spend 3k, that's still a significant cost. Like MMM wrote in an article, if you're not getting rich in your 20s, you're doing it wrong.

This is true, however there's also many benefits of taking time off to travel: Experience, networking, business opportunities, creating content for websites, and most importantly, time to refresh and reset to help my sanity. The travel has also been very good for my relationship with my partner, nothing makes or breaks your stoicism, teamwork and strength as a partnership than having to deal with stressful and testing situations while in a backwater area developing country or bogged somewhere in the bush or desolate beach.

So yes, the travel has cost us both in terms of money, but we've also gained a lot more value in more intangible terms. My focus has always been trying to find a balance between saving for retirement and having security, and still being able to travel and have joy and excitement in my life to continue to build my social capital and experience.

I haven't cracked it yet, but there's plenty of options out there.
« Last Edit: October 17, 2016, 03:57:06 PM by frugalsurfer »

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #22 on: October 19, 2016, 09:17:45 PM »
Any experience with ethical investing? Or is that a whole other thread?

I figure if I am going to be putting my money somewhere it may as well NOT be contributing towards /assisting unethical or planet destroying industries just so I can make a few extra bucks.

I've already divested my superannuation (mandatory retirement fund in Australia) and allocated to an ethical, environmental focused company.

I'd like to do the same with my savings. Australian Ethical are one of few options, however they are a managed fund so and they still invest in many companies and industries that I consider unethical. I contacted Vanguard and they have no ethical investing policy/strategy other than avoiding worst case offenders.. this is not really enough for me if there are other companies to invest with.

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As a fiduciary, Vanguard is required to manage our funds and ETFs in the best interests of investors and obliged to maximise returns in order to help investors meet their financial goals. It would be exceedingly difficult, if not impossible, to fulfil these obligations while managing portfolios that reflect the social concerns of all of our investors.

We acknowledge, however, that there may be instances when it is appropriate to assess, and possibly address, certain social issues. To that end, we have established a formal procedure for all Vanguard funds for identifying and monitoring portfolio companies whose direct involvement in crimes against humanity or patterns of egregious abuses of human rights would warrant engagement or potential divestment. While ultimately our judgement on these issues and actions with respect to specific companies may differ from that of special interest groups and other institutions, we believe our approach strikes the appropriate balance between corporate responsibility and our fiduciary obligations.

Or maybe I should learn the ropes and create my own tailored portfolio?

Mark31

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #23 on: October 19, 2016, 11:34:57 PM »
I invest ďethicallyĒ but thereís generally not a lot of love for ethical investments on these boards. People will say that investing in ethically good companies does not make the world a better place and that you should invest in index funds and donate to a good cause with the extra money you make. (although of course, charitable donations are quite different to companies engaging ethically with the world.) Iím not qualified to, nor interested in engaging with these arguments.

I feel good investing ethically (and not in a holier than thou way) and I think the industries that get invested in in ethical funds, like medical technology and alternative energy have a positive future for returns (which might fit me broadly in the stockpicker category, something else frowned on here.)

Donít be too particular about ethical conditions. Investing somewhat ethically is better than being paralysed and leaving the money in the bank, where itís probably indirectly being used to fund operations you donít consider ethical at all.

If you really canít come at Aust Ethicals investment screen, or you donít have enough money to get charged Ďwholesaleí fund management fees, they are one of the few companies that actually list on their website all the companies they invest in. Start with this list and apply whatever other ethical screens you want to add. If you trawl through their reports you can get an idea of roughly how their investments are split among their major holdings. You can then invest directly.

NB: Not all of my money is invested ethically, my super isnít, for one.

Fresh Bread

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #24 on: October 20, 2016, 12:10:25 AM »
Yay another Aussie!

I see you have found a lodger, that's great, I hope you can sock away a bit more money. You are doing so well with expenses. I've done the office job for the $$ as well and I also needed some serious away time to maintain my mental health - had to take it in serious chunks of unpaid leave for 6 months otherwise it was too stressful (no-one does your work when you're away). After we paid off the mortgage on our place I quit and did non-stressful jobs and my sanity was restored for good :)

Before I saw you got the lodger I was going to suggest (assuming you're living on either the Central Coast or Illawarra and commuting to the CBD proper as opposed to Parramatta CBD) that there are cheapish places to live near the beach but within a shorter than 1.5hr commute from the city, should it get to be intolerable. The northern-er northern beaches e.g. Narrabeen have 1 bed with parking places for around $400, especially if you look on gumtree listings for granny flats. If you can bear getting on the bus by 6.30am you'll have a 45min commute. Coming home you need to get on the bus by 4.30pm or at least before 5pm so not all workplaces can accommodate that but gives you the chance of a late arvo surf. You're stuck with the bus unfortunately on the northern beaches but the price of a bus trip is capped at around $5 or there are many bike commuters making the trek via much safer back roads. Having said all that, I know someone that wrote a book during their 1hr each way train commute from the central coast so maybe you can start an e-book side hustle, ha ha!

I have money in Ratesetter and I'm happy with the risk after reading the fine print and their back up fund, I haven't had any problems. I wouldn't put more than say 20% of our liquid funds in it just in case the whole business goes belly up rather than any one borrower not being able to repay.

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #25 on: October 20, 2016, 05:45:14 PM »
If you really canít come at Aust Ethicals investment screen, or you donít have enough money to get charged Ďwholesaleí fund management fees, they are one of the few companies that actually list on their website all the companies they invest in. Start with this list and apply whatever other ethical screens you want to add. If you trawl through their reports you can get an idea of roughly how their investments are split among their major holdings. You can then invest directly.

Some solid advice. I will take some time to re-read and digest.

Since I am a little obsessive and detail oriented I may go down the DIY route instead of relying on a managed fund. At least in part.

I really do want to put my money where my mouth is so to speak. Without going into too much political detail, my philosophy is that 'democracy' as we know it is a failed concept and people have the most influence by 'voting with their wallet' rather than at a booth.

This is one of many good reasons why I avoid driving a car unnecessarily and why I eat plant based foods etc. I'd feel like a bit of a hypocrite to have be spouting the environmental benefits of riding a bicycle whilst simultaneously profiting from investments made with fossil fuel companies.

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #26 on: October 20, 2016, 05:59:52 PM »
Yay another Aussie!

Howdy!

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I see you have found a lodger, that's great, I hope you can sock away a bit more money. You are doing so well with expenses.

Yes definitely good. I was surprised how long it took to find someone suitable (over a month!). My partner isn't working at the moment, so it takes a large bit of financial weight off her shoulders too.

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Having said all that, I know someone that wrote a book during their 1hr each way train commute from the central coast so maybe you can start an e-book side hustle, ha ha!

I suffer from motion sickness, so the bus is a no-go for me unless it's a short trip less than 5 minutes. I much prefer the train because it's more steady and spacious (at least for most of the trip). Currently I am just watching media or reading fiction ebooks on my trip. But I definitely have been thinking about ways of being more productive and using this time for self improvement and/or enrichment as you mentioned. I have a 10" android tablet with a compact bluetooth keyboard case which is reasonably comfortable to use for short periods of time so I should definitely be creating more content during this time.

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I have money in Ratesetter and I'm happy with the risk after reading the fine print and their back up fund, I haven't had any problems. I wouldn't put more than say 20% of our liquid funds in it just in case the whole business goes belly up rather than any one borrower not being able to repay.

I'm still really interested in the concept of P2P lending, not just from the perspective of making money either, so I may follow your sort of approach and use a small, manageable portion of my funds with it to see how it works out.

Society One was another P2P company that I've heard good reports on too.

Thanks for your contributions. It's given me a bit to chew on and think about.

Anatidae V

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #27 on: October 20, 2016, 06:25:04 PM »
I feel you on the motion sickness. I have ruled out certain train lines and anything further than a very direct bus or walk to a train station, which leaves us looking in expensive areas. Sounds like you're using your time well enough, but being able to create on the commute can make it feel less wasteful for sure.

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #28 on: October 20, 2016, 06:40:02 PM »
I feel you on the motion sickness. I have ruled out certain train lines and anything further than a very direct bus or walk to a train station, which leaves us looking in expensive areas. Sounds like you're using your time well enough, but being able to create on the commute can make it feel less wasteful for sure.

Yes it definitely complicated things. Usually it's not too bad on the train and I am able to watch or read without being affected as long as I sit facing forwards, but some days I can't do anything other than look out the window and try to calm it down before it makes me sick. But sitting on a bus is whole other ball game.. I can't read or do anything and even then I start feeling queasy after a while if the traffic is bad. Another reason why I much preferred riding my bike to work in the past when I was close enough!

Writing an ebook and website content is definitely on the cards!

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #29 on: October 20, 2016, 09:01:05 PM »
The ethical investing is hard, I'm also torn, i.e. also mostly plant-based eater, ride bike etc, but will probably invest in general ETFs anyway. I went to a talk once by Bill Mckibben about divesting - he made some very good points but to make it effective it needs to be done on a much larger scale.

It's probably important to not be to concerned about the efficacy of 'divestment' per se, but look at the potential for investment in companies and industries that are better aligned with your values. That's the way I see it. I'd far prefer to support companies that produce fair trade products, or develop renewable energy, plant based foods etc.

happy

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #30 on: October 21, 2016, 03:56:05 AM »
Welcome , and following....

frugalsurfer

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Re: Case study: Frugal in Australia... Taking the next step - where to now?
« Reply #31 on: November 22, 2016, 05:25:11 PM »
Hey all
Just an update. Our tenant came and went due to an unexpected contract option.
I still haven't moved my cash out of my high-interest savings account, but I have kept it in mind and will look to resolve in the next week. Work commitments, including working from home 20 hours over the past week alone, have prevented me from having any free time or headspace to look after my own affairs. Now that there's a lull in the action I want to get on top of this before the next round...