Author Topic: Case Study: Aussie COL, How Far Off FI Are We?  (Read 10154 times)

AussieCat

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Case Study: Aussie COL, How Far Off FI Are We?
« on: March 27, 2016, 08:02:14 PM »
Life Situation: Married - both of us are 40 years old.  Both fairly frugal, but hubby has had harder time with decision to get rid of second car. Children ages 8 and 10, living in outer suburban Melbourne area.  Hubby works for a government agency in the CBD 50 odd kms away (uses public transport), I contract from home in finance area and have a part time remote role as an employee too.

We made some poor business decisions, but thanks to being reasonably naturally frugal we aren't in as big a hole as we might have been. The below is actually a conservative forecast forward two years, as our current situation is changing by then (selling our farm land, currently leased to other farmers). So, the below is for us both aged 42 in April 2018.

Retirement accounts in Australia - our employers pay 9.5% into our retirement (superannuation) accounts on top of our wage. These are taxed at 15% when they are deposited - no matter our personal income tax rates. Earnings in our retirement accounts on investments is taxed at 15% until we reach 65, when they are tax free.

Earnings and Deductions
Gross Earnings      $110,000
Superannuation paid our employers $9,500
Earnings plus Super $119,500
Income tax $16,500 (Aussies will recognise this is low - my businesses carried forward losses mean I pay no tax on my contract income)
Tax on superannuation $1,425
Net Earnings $101,575

Monthly Earnings $8,464.58

Monthly expenses:
House Insurance/Rates $200
Water            $100 (edited, I had bill frequency wrong)
Kid activities         $50
Netflix         $14
Internet/home phone     $80
Cellphones         $70
Gas/Power         $150 (edited, bill frequencies wrong)
Health Insurance       $195
Prescriptions     $10
Auto (Gas & Maintenance)    $385 (looking to reduce to $300 by selling one car)
Auto (insurance & registrations) $250 (looking to halve this by selling one car)
Groceries         $1000 (includes pet needs)
Dental/Medical $50
Yoga/Pilates    $100
Entertainment (Movies, Etc.)    $30
Public Transport    $100
Clothing         $70
Eating out         $60
Travel            $200 (tweaked after further chat with hubby)
Home Improvement      $100
Gifts & Special Events      $25
Kids pocket money $86 (left this out)
Miscellaneous $20
Total Expenditure  $3,345

Assets:
Home - $380,000 value
Emergency Savings - $20,000
Superannuation funds - $320,000 (can access at 60, tax free after 65)
Shares/Stocks/ETF's (vanguard) - $100,000 (looking at increasing by $15,000 by selling 2nd car)
Investment Bond - $50,000 (very tax effective in Australia, but can't be accessed for 10 years or tax benefits lost)
Total - $870,000

Liabilities:
None

Net worth: $870,000

Current Plan: Either keep working for another couple of years, and then more to SWAMI or move my hubby to more part time work from now (keeping mind 'now' is April 2018) as his job is quite high stress with lots of on call and after hours, accepting we won't be completely FI for a bit longer.

Specific Questions:

How far off FI would you say we will still be?

I'm not sure I get using the home in net worth if it's not generating funds to live off, can I get some help?

Can I get feedback on current spending levels? Making moves to reduce auto, but I feel grocery is too high. If my health and strength (currently quite poor) has improved enough by then, I'd feel safe enough in my own strength and ability to drop the guided yoga/Pilates and practice at home.

Thank you in advance for your thoughts :)
« Last Edit: March 29, 2016, 06:37:11 AM by AussieCat »

Sandia

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #1 on: March 27, 2016, 09:01:01 PM »
Hi AussieCat,

I'm in early stages of wealth-building myself, so all I can comment on is your current spending levels. I have two+ years of data from spending like a student in Perth, and here are the things I think are a bit high in your budget:

- internet/home phone. Do you need that much internet? I work online from home in a sharehouse and we've done fine with the lowest amount of internet available, for $50 per month.

- groceries. I've found it pretty easy to spend below $150 per month per person, which in your case would be $600 + pets. Partly I've done this by eating less meat (easy to change) and partly I've done this by finding the best shops (Asian markets - coles/woolies are complete rip offs - but you have to find one convenient for you). Use your phone to take pics of prices and start comparing around. Then set maximum prices you feel comfortable spending; I don't spend more than $2/kg for apples/oranges/bananas, or more than $7/kg for meat/eggs/fish, etc. Eat oats for breakfast with chopped apples/bananas, spices, nuts, softened with hot water.

- toiletries/hair care. This seems like a lot. What do you need besides soap and shampoo and toothpaste? Try cutting your own hair; you'd be surprised how easy it is (and if it isn't, it always grows back).

- gifts/special events. This is enormous. Instead of budgeting to buy gifts for people who probably already have too much stuff, try to approach each event with the mindset of "How can I show this person that I think they're special WITHOUT spending money?"

Lowering your expenses lowers the number you need to be FI, which will put you a lot closer to being FI in the next two years.

AussieCat

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #2 on: March 28, 2016, 12:20:53 AM »


- internet/home phone. Do you need that much internet?

Probably not! It's an iinet bundle, with home phone (which we don't use) and we never come even close to the quota - can I ask who you are with?

- groceries. I've found it pretty easy to spend below $150 per month per person, which in your case would be $600 + pets.

Great tips! We are already very low meat eaters, and used to be pretty careful with our price/kg on all items - but I think we've slipped into convenience shopping over the last year or two as hubby gets off the train right next to Safeway. I'll work on reigning it in - we'll go back to the Asian grocer, market etc - thank you!

- toiletries/hair care. This seems like a lot.

I'm embarrassed - I copied and pasted from an old list I'd had and didn't edit quite as well as I thought! We actually don't use 'normal' toiletries at all - I make our laundry detergent, dishwasher powder, shower soap, and we use pure soap for bathing and hair. Bicarb, vinegar, DIY diluted liquid soap for cleaning. All these costs (buy in bulk once every 18 months) is in the groceries budget. I cut hubby and kids hair, hubby sports a beard, I have a friend trim mine once a year and I help her with her tax :)

- gifts/special events.

And I added a zero to this one - *blush* - edited now! We don't buy for each other, and never have. Low cost gifts for kids, family and friends.

Lowering your expenses lowers the number you need to be FI, which will put you a lot closer to being FI in the next two years.

Thanks so much for your input - much appreciated!

Sandia

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #3 on: March 28, 2016, 02:13:49 AM »


- internet/home phone. Do you need that much internet?

Probably not! It's an iinet bundle, with home phone (which we don't use) and we never come even close to the quota - can I ask who you are with?

I am with iinet, for a $50 per month package, which also includes a home phone (but it has terrible rates and we never use it). I think that's their cheapest package, but be sure to shop around; Melbourne is bigger than my city and they probably have better competition.

- groceries. I've found it pretty easy to spend below $150 per month per person, which in your case would be $600 + pets.

Great tips! We are already very low meat eaters, and used to be pretty careful with our price/kg on all items - but I think we've slipped into convenience shopping over the last year or two as hubby gets off the train right next to Safeway. I'll work on reigning it in - we'll go back to the Asian grocer, market etc - thank you!

Convenience shopping is my bane, too. At $1000 per month, you should definitely track your spending in this category in a bit more detail. Think about how you want to categorise things; fewer is better, but you want to use the categories to help you answer questions about your groceries.

For example, my categories are: meat (because it's usually the single most expensive thing I buy), veggies at the Asian markets (which I was trying to make the bulk of my shopping), dry goods at a bulk shop (e.g. rice, nuts, flours, etc. because I wanted to focus on buying from the locally-owned shop), convenience meals when a bad day hits, and Coles/Woolies/IGA. You might want categories based more on meals or food groups or ingredients vs convenience food. You definitely want to sort out how much the pets cost versus the humans. Only then can you figure out where all that money is going and whether you're really getting value for your money.


- toiletries/hair care. This seems like a lot.

I'm embarrassed - I copied and pasted from an old list I'd had and didn't edit quite as well as I thought! We actually don't use 'normal' toiletries at all - I make our laundry detergent, dishwasher powder, shower soap, and we use pure soap for bathing and hair. Bicarb, vinegar, DIY diluted liquid soap for cleaning. All these costs (buy in bulk once every 18 months) is in the groceries budget. I cut hubby and kids hair, hubby sports a beard, I have a friend trim mine once a year and I help her with her tax :)

Ah, neat! So does this category go to zero?

- gifts/special events.

And I added a zero to this one - *blush* - edited now! We don't buy for each other, and never have. Low cost gifts for kids, family and friends.

Haha, losing a zero makes that number much more reasonable!

Lowering your expenses lowers the number you need to be FI, which will put you a lot closer to being FI in the next two years.

Thanks so much for your input - much appreciated!

Neat, now that those easily reduced expenses are out of the way, the next things to look at probably are:

- clothing. Do you really spend $70 per month on clothes? Even if that category includes shoes, that seems like a lot. I've had great luck in op shops, especially for kids and women's clothes, but frankly, I've found I need less clothes than I have since I can so easily wash clothes every week.

- home improvement. Are you saving up for big replacements or plan to renovate? With such a big emergency fund, this seems like a lot out of your budget unless you're planning for some specific expense. If you are planning, then make sure to redirect the funds elsewhere when you reach your savings goal.

- gas/power, water. ~$300 per month on utilities is high. Start figuring out where this is going. Are you just using heaps of water/power? Do you need to use heaps of water/power?

- travel. This is a lot of money per month, but I spend a ton on travel too, so I left this for last. Is international travel hugely important to your family? If you're just going to have holidays, there are HEAPS of gorgeous places to travel in Australia that would be cheaper and just as amazing as anywhere else in the world. If you're going to visit family or deeply believe in showing your kids other cultures, then cool, go for it. But be aware this is a huge part of your budget and you don't have to go abroad to have a nice time.

- cars. I agree that you should sell the second car if Hubby catches public transit every day and you work from home. You can always get a cheaper car later when the kids hit driving age, but in the meantime you've saved yourselves unnecessary insurance/maintenance/etc.

Question: if you are spending ~$3500 per month and earning ~$8500 per month, where is the $5000 surplus going? Into your mortgage?

AussieCat

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #4 on: March 28, 2016, 04:08:49 AM »
This is great - I really needed someone to ask exactly these questions!

Will look into different iiNet package, and will definately break down the grocery budget more - our pets eat raw, and again from convenience shopping this has increased from about $10/week to about $21/week - just because we aren't going to the butcher, who also happily handed over chicken frames, lamb necks, offal etc for either cheap or nix. Slack! Will get back on it. Definately slipped into more processed again - we were eating predominantly fruit, veg, legumes, nuts etc Too much crap is slipping into the trolley me thinks!

Yes, toiletries/haircuts are nil - bulk ingredients under grocery.

Clothing is bumped up by school uniforms (state school, but ridiculous priced uniform) - we buy as many basics as we can (navy shorts, hats etc) on special or at op/thrift shops - it's the polos and windcheaters that are disgusting! And they aren't a plain colour you can match - Tri-coloured, spliced etc Also, both boys do Little Aths - again, uniforms and running shoes. Hubby and I shop second hand, and I can't think of a article I bought in the last year. I'm sure there's room to improve :)

Home improvement - yep, updating kitchen and bathrooms.. Do most of the work ourself, we love it :)

Will definately look into the electricity/gas/water - we have all LED lighting, never use a clothes dryer etc - water (and therefore gas) is probably driven in part by our eldest son having severe eczema and needing to have a soaking bath each day - the use of pure soap has improved this a lot lately, but I'm running off historical bills. Can I ask what you would think it should be closer to? Be very interested :)

Travel - discussing just that today. So much to see here, we love camping and are thinking about some biking trips. Certainly not a year in year  out cost - like the home improvement.

We are mortgage free (or will be in two years). Surplus gets split between our various share/etf holdings (AFIC, Argo, VGAD, adding some other Vanguard options, various smaller holdings) and the investment bond - not keen on contributing anymore to super, I feel there's enough in there.

Thanks again - huge value in another set of eyes :)


AussieCat

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #5 on: March 28, 2016, 04:47:36 AM »
Ugh - just looked at our latest water bill. $300 of a $367 bill is service charges!

happy

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #6 on: March 28, 2016, 06:02:25 AM »
By my calculations you need 1.2mill to retire, using 3.5%SWR ( i.e. 28.5 time your annual expenses) and $42240 as your annual expenses.  You have 490k.  You can't count your house for  retirement purposes,  especially as your house is well priced for Australia, making it hard to downsize or relocate.

If you plug these numbers into the Networthify calculator (https://networthify.com/calculator/earlyretirement?income=101575&initialBalance=490000&expenses=42240&annualPct=5&withdrawalRate=4

You have a savings rate of 58% and can retire in 6 years :), assuming an after tax interest rate of 5%

AussieCat

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #7 on: March 28, 2016, 07:29:06 AM »
By my calculations you need 1.2mill to retire, using 3.5%SWR ( i.e. 28.5 time your annual expenses) and $42240 as your annual expenses.  You have 490k.  You can't count your house for  retirement purposes,  especially as your house is well priced for Australia, making it hard to downsize or relocate.

If you plug these numbers into the Networthify calculator (https://networthify.com/calculator/earlyretirement?income=101575&initialBalance=490000&expenses=42240&annualPct=5&withdrawalRate=4

You have a savings rate of 58% and can retire in 6 years :), assuming an after tax interest rate of 5%

Thanks Happy!

Great tool - thank you :)

I think there's another $660 or so we can shave off that budget on reviewing it further - my historical figures are a bit inflated as we had my parents living here for a while, think we might pass on the OS travel and need to sell one car. I can also pick up more contract work fairly easily - another's days work a week will bring in another $2,000/month (tax free thanks to carried forward losses).

Had wanted to not add too many hours/week for me as I have some health issues I need to resolve - but I'm thinking another day isn't too onerous. :D

Why the 3.5%? I'd been working on the 4% rule...

Thank you!

happy

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #8 on: March 28, 2016, 04:47:36 PM »
SWR is reportedly  a little lower in Australia @3.5% vs US @4%.   

I think the Networthify calculator probably assumes a 4% WR also. 

AussieCat

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #9 on: March 28, 2016, 09:43:30 PM »
SWR is reportedly  a little lower in Australia @3.5% vs US @4%.   

I think the Networthify calculator probably assumes a 4% WR also.

Thanks Happy - great to know :)

alsoknownasDean

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #10 on: March 29, 2016, 04:40:39 AM »
You're doing pretty well, but there's always room for optimisation :)

Is there an Aldi in your area? Might help with cutting the grocery bill. Much of their food is actually pretty good :)

I'd have a look into that electricity bill, and work out how many kilowatt hours you're using per day. Are you using an older fridge? A great big TV? Are there ways you could reduce your heating/cooling expenses (efficiency improvements)? Have you compared providers lately? Considered solar?

Check out this to compare your electricity and gas bill:

http://switchon.vic.gov.au

How much internet data do you need? Although of course here in Australia you'll struggle to get that much lower than $50-60 a month.

That said, you're in a position where you can sit tight, invest, and wait until FIRE. You've already paid off your house, that's a big plus.

AussieCat

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #11 on: March 29, 2016, 06:28:57 AM »
You're doing pretty well, but there's always room for optimisation :)

Is there an Aldi in your area? Might help with cutting the grocery bill. Much of their food is actually pretty good :)

I'd have a look into that electricity bill, and work out how many kilowatt hours you're using per day. Are you using an older fridge? A great big TV? Are there ways you could reduce your heating/cooling expenses (efficiency improvements)? Have you compared providers lately? Considered solar?

Check out this to compare your electricity and gas bill:

http://switchon.vic.gov.au

How much internet data do you need? Although of course here in Australia you'll struggle to get that much lower than $50-60 a month.

That said, you're in a position where you can sit tight, invest, and wait until FIRE. You've already paid off your house, that's a big plus.

Thanks Dean :)

Yes, we were shopping at Aldi, Asian grocer, butcher, markets - but have slipped into convenience driven complacency lately, as well as too much junk food! We'll reign it back in :)

I need to edit the gas/water/electricity - I got the frequency each is paid wrong. Water is closer to $90/month, $40/month for gas and $110/month for electricity.

What should I be aiming at kWH wise? Our last quarter (our most expensive for the year) we used 14.70/day - the bill says that puts us between a one and 3 person household, but I'm not sure if that's reliable. We review our providers each year.

Thanks so much for reviewing :)

Scandium

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #12 on: March 29, 2016, 06:57:24 AM »
What does the $385 in the 'car' category go to? That seems very high when you're home and husband takes transit. How much do you spend on gas? Or do you have a crapton of maintenance? If you spend $300/month on maintenance maybe you need a more reliable car..

I drive 40 miles/day and that's less than $50/month in gas for my prius. (sorry, do you say petrol in australia? I wasn't sure.)

AussieCat

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #13 on: March 29, 2016, 07:54:14 AM »
What does the $385 in the 'car' category go to? That seems very high when you're home and husband takes transit. How much do you spend on gas? Or do you have a crapton of maintenance? If you spend $300/month on maintenance maybe you need a more reliable car..

I drive 40 miles/day and that's less than $50/month in gas for my prius. (sorry, do you say petrol in australia? I wasn't sure.)

That's got me thinking! It's a little complicated as currently work pays some of my husbands fuel (only for next two years), making it harder to track.

I don't think I've worked this out correctly as this is a 'two year in the future' budget, whereas ATM we're (mostly I'm) still driving about 51 miles/day in a 'normal' week, which in our cars is about $195/month. One car gets 37.33MPG, the other gets 25.29MPG (the one we will sell).

We should reduce this to an average about 100 miles/week (little travel to work, more to see my husband parents 100 miles away), and only in the 37.33MPG vehicle... so let me revise. This is what it should be, with our intended use:

Auto maintenance  $50/month (servicing) - I had this at $190/month to cover our current use, again hard to judge, as hubby's work pays for his car for the next two years

Gas (diesel in our case) $48/month - had this at $195

Tyres $8/month - had left this out

Look at that - down to $106/month, still being generous with servicing/tyres. I'm sorry, I'm not sure this 'in the future' thing was a great idea! Even I'm finding it confusing!

Registration and insurance will come down to $125/month too - hubby agreed yesterday to sell the most clown like car :D

happy

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #14 on: March 29, 2016, 03:43:18 PM »
You can't compare petrol costs with US. Fuel here is $1 - $1.40/litre AUD whereas its something like $1.70 - $2 US per gallon.  4litres = 1US gallon.  So  approx  $4-5 US/ gallon.

I do agree with Scandium about the economy of the Prius. I get 5l/100km in my now 7 year old Prius.  It easily cut my fuel costs down to a third of what I was paying in my medium size SUV (Kluger).

AussieCat

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #15 on: March 29, 2016, 04:21:09 PM »
You can't compare petrol costs with US. Fuel here is $1 - $1.40/litre AUD whereas its something like $1.70 - $2 US per gallon.  4litres = 1US gallon.  So  approx  $4-5 US/ gallon.

I do agree with Scandium about the economy of the Prius. I get 5l/100km in my now 7 year old Prius.  It easily cut my fuel costs down to a third of what I was paying in my medium size SUV (Kluger).

Thanks Happy :D

We get 6.3l/100km from our Kia Rondo (diesel) - the one we want to keep.

Going to sell the Captiva, which is 9.3l/100km (also diesel) ASAP - just trying to determine costs involved to end the novated lease (salary sacrificed) we bought it under (bought a demo for $25k, still has under 20,000kms on clock), how tax savings impact my calcs - plugging it all into a spreadsheet ATM... my fun for the morning ;)

Mark31

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #16 on: March 29, 2016, 10:10:35 PM »
Hello Aussiecat,

You donít appear to have included family tax benefits, FTB A and FTB B in your income.

If the earning figures are for the both of you, you must be getting at least one of these. If youíre not getting these for whatever reason, donít forget to include them in your retirement plans. You only need to save up enough for you and your husband to retire, and the family tax benefit should cover all or most of the kidís costs.

Your spending, assuming youíve remembered everything, is pretty good, although obviously you can tweak it.

In my similar household we spend more overall (probably 50k this year, sigh), but I can see areas where we spend less, like total phone/internet costs, utilities, only having one car and no health insurance. Iím in a different state, but car spending seems high Ė do you have comprehensive insurance, and do you really need it? Conversely, your combined house insurance and rates seems wonderfully low. Oh, and we spend under $600 a month on groceries for 2 adults, 2 primary kids and a toddler.

Iím not completely against health insurance, but very few people really sit down and work out if it provides value to them, taking into account the opportunity cost of not investing the money instead.

Personally I always forget some spending if using a bottom up approach, so I prefer to go top down, recording all money coming in, subtracting amounts moved to investments, and the remainder is whatís spent.

Your superannuation accounts are possibly taking out money for Death and TPD and Income Protection. Decide if you want these, and if you do, what your criteria will be for dropping them in the future.

The only other thing, and I imagine youíll be doing this, is to keep on tracking your spending, so you can work out a long term average, (inflation adjusted, of course), to better understand the final stash size youíll need.

JLR

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #17 on: March 29, 2016, 11:23:57 PM »
Replying to follow.

AussieCat

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #18 on: March 30, 2016, 02:51:31 AM »

You donít appear to have included family tax benefits, FTB A and FTB B in your income.

In my similar household we spend more overall (probably 50k this year, sigh), but I can see areas where we spend less, like total phone/internet costs, utilities, only having one car and no health insurance. Iím in a different state, but car spending seems high Ė do you have comprehensive insurance, and do you really need it? Conversely, your combined house insurance and rates seems wonderfully low. <b>Oh, and we spend under $600 a month on groceries for 2 adults, 2 primary kids and a toddler.</b>


Thank you so much for the input Mark :D

FTB A and B - don't qualify for them ATM due to our farm lease income (convoluted reasons why we've gone for a two year down the track case study in my journal!) - but I would think we would when we sell the farm... we used to qualify. I'll make sure I look into it again - thank you!

Car is definitely out - I was using older figures for some reason, prior to us changing how we use them - it should end up being closer to $106 for servicing/tyres/fuel, $125 for rego/insurance. Interesting to consider comprehensive - perhaps we don't.

Yes, rates are a smidge under $1,600/yr and home/contents insurance a smidge over $800/yr.

I NEED to know about this $600 grocery bill - can you share more? I don't doubt we can get ours back down to $750-$800 with barely a whisper - we've had a strange thing occur... in moving to more PT and less driving, we've sent our grocery bill up out of pure convenience - Safeway is next to the train station! Our pet food bills have nearly tripled and we found ourselves buying more junk. Back to Aldi, the Asian grocer, market and butcher we go! We don't eat much in the way of meat at all ourselves - but the butcher is lovely and seemed quite happy to unload chicken frames, offal, lamb necks etc for our raw diet fur babies for very cheap.

Health insurance - for someone reasonably logical, I allow fear to absolutely rule me on this! I know our public system is fabulous, and I can see the opportunity cost argument making so much sense. One son has had a couple of surgeries we wouldn't have liked to wait for, as have my husband and I.. but I feel they are behind us. I think the fear is driven by some chronic health issues I have - but stupidly, they wont be resolved by surgery, rehab, or private hospital stays! I'm working on letting go! ;)

Yes, we do have death, TPD and IP. We've been discussing this week dropping all three - and when to do so. I'm not seeing the logic in keeping them the nearer we approach FIRE - but I'll admit I'm tired and not computing so well! hehehe

Yes, I'm looking forward to seeing the changes in our spending, and getting more of a handle on some of our costs. I use YNAB, which I love, but I've only about three months of recent data in their, then a much older data file. Will do an update in my journal as we progress.

Thanks again - really appreciate all this fab feedback :D

Mark31

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #19 on: March 30, 2016, 03:11:09 AM »
Correction to my earlier comment: Some temporary lack of cognition led me to state we spend under $600 a month on groceries. No idea where that came from. It's actually closer to $1,000 a month, pretty similar to your family.

Sorry if you felt momentarily inadequate!

happy

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #20 on: March 30, 2016, 03:18:25 AM »
I can't get mine much under $800-$900/ month for 3 adults, last I tracked.  Periodically I have a go at it.  I cook from scratch, stockpile, grow some vege etc but our downfall is basically too much good quality meat.  If we padded it out with more low cost carbs we'd save but its not a compromise I've been willing to make.

AussieCat

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #21 on: March 30, 2016, 04:02:21 AM »
Correction to my earlier comment: Some temporary lack of cognition led me to state we spend under $600 a month on groceries. No idea where that came from. It's actually closer to $1,000 a month, pretty similar to your family.

Sorry if you felt momentarily inadequate!

I feel way too many moments of inadequacy - and temporary lacks in cognition! ;)

AussieCat

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #22 on: March 30, 2016, 04:06:33 AM »
I can't get mine much under $800-$900/ month for 3 adults, last I tracked.  Periodically I have a go at it.  I cook from scratch, stockpile, grow some vege etc but our downfall is basically too much good quality meat.  If we padded it out with more low cost carbs we'd save but its not a compromise I've been willing to make.

I expect ours will go up as the kids get older, and our meat requirements increase - I might be kidding myself on our previous $800/month - the kids were younger then!

We ARE buying too much processed crap, that we would never normally - our local Safeway has a very clever soundtrack going, it puts both hubby and I in party mode (think two nut bags bopping around in the aisles to 80's music) and we end up down aisles we'd bypass completely. Back to Aldi! :D



Mark31

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #23 on: April 03, 2016, 05:59:56 PM »
Re the 3.5 vs 4 per cent SWR, Iíve got two perspectives on that.

First Perspective:
3.5 per cent?!?! No Way! Iíll be an old man if I have to save up that much money. Iíll take my chances with four per cent thank you very much. Worst comes to worst, thereís always the Old Age Pension.

Second Perspective:
Itís not like 4% will fail and 3.5% will succeed, itís just a difference in likelihoods of success.
They both have the same kinds of risk to mitigate Ė Sequence of Returns Risk and Sequence of Spending Risk.
If thereís a GFC like event immediately after you retire, youíre likely stuffed either way, and youíll have to go back to work as soon as companies start hiring again.
If you retire on 4% and have two ripper years, you can move to 3.5% no effort needed.
With spending, we all know spending varies from year to year, especially if youíre a homeowner.
Myself, Iíd be retiring on 4% but with a trickle of paid work coming in from somewhere that could potentially be scaled up, then when the stash gets to 3.5% SWR properly retire.

happy

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Re: Case Study: Aussie COL, How Far Off FI Are We?
« Reply #24 on: April 04, 2016, 07:21:02 PM »
I have to admit, I'll be using 4-4.5% since I will be retiring at 60 or so.