Author Topic: How to Start  (Read 2981 times)

LoneStar

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How to Start
« on: April 20, 2015, 08:24:48 AM »
Hello everyone!  I was hoping I could get, and would really appreciate, a little advice on how to get started on my stache given my current circumstances.  I suppose I'll start with a short bit of background, current situation, and then some thoughts and questions I have myself.. So here we go!

I'm a 31 year old US citizen and New Zealand resident(perm) currently living and working in Auckland.  I just turned 31 last week.  Although I have a pretty good salary I've managed to not build much in the way of assets and I'm starting to feel I squandered the past 4-5 years :|  I heard about MMM a few years ago, but just started reading his blog last week and am totally stoked about the idea of FI.. Suddenly I feel very aware of my current situation, where I'd like to be, and how bad my habits were.  My partner does not work currently as she is having a rough time finding work in her field(advertising).  She is however on board with the idea of early retirement and frugal living :)  She's also from Indonesia which is relevant because she can own property there and we have a dream/goal of owning a villa in Bali one day.

Here is what we starting with all in NZD:

Debt:
0(as of this week, yay!)

Income:
~7500NZD/mo takehome

Expenses:
1800/mo rent
100/mo gas
~320/mo food
~150/misc
Assets:
4k cash
3k p2p lending
18-20k(tops) car

So unfortunately we are a bit asset starved, but are now debt free and can save a pretty hefty chunk of my income. I'm just not sure what to be doing with it?  I just setup a RaboDirect Premium to sweep most of my savings out next month with maybe 1k going into the p2p lending. After a bit builds I should probably move it into index funds?  But what about property?  Would I be better looking to the US or Indonesia to get some revenue streams and assets building through rentals? But I need the money in funds and such for the compounding, right?

Further to that I'm thinking about doing the following:
*Selling the car and going car-less or getting a 6k used vehicle
*Moving back to the states(I think I can get another 30k+ in salary and further reduce my cost of living)
*Boosting savings further and getting a little travel monies when my partner becomes employed

Any and all advice is welcome :)
« Last Edit: April 20, 2015, 09:14:30 AM by LoneStar »

velocistar237

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Re: How to Start
« Reply #1 on: April 20, 2015, 09:26:41 AM »
If you've given us all your information, then you have a savings rate pushing 70%, which is great. If you don't think that's the case, then help us out with more information after you check the Case Study guidelines. You might want to track your expenses for a while to get a clearer picture.

Reducing the car expense sounds like a good idea. Do you drive much? I don't know how far $100 NZD of gas will take you.

How much do you bike?

Congrats on finishing off your debt.

mozar

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Re: How to Start
« Reply #2 on: April 20, 2015, 08:00:45 PM »
I get the impression that people either get to FIRE by real estate (rents cover living expenses) or living off a withdrawal from passive investing, but not both. Learn about both before you pursue one path or another.

Runningtuff

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Re: How to Start
« Reply #3 on: April 21, 2015, 04:20:21 AM »
Kiwisaver?

LoneStar

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Re: How to Start
« Reply #4 on: April 21, 2015, 06:14:57 AM »
Hello and sorry; forums have been up and down for me here and I've been busily working from home :)

@velocistar237
Those numbers are accurate to within about 2-3 percent.  My main hobbies are expanding my comp-sci and other knowledge and then rock climbing and I have everything I need for both of those already.  I just happen to have been super carefree with my money in the past :|

Fuel is about 7.8(5.8USD)/gallon here for me.. I'm pretty much a car-clown ATM TBH.. I just happen to not travel very far.  I moved in a lot closer to work, grocery shop once a week, and the booze shop is unfortunately right on the way home..  Was right on the way home.  Slashing that expensive pretty heavily..

The main reason I'm thinking about selling the car is it's just too much car.  I was an idiot and financed 30k at about 10.5(typical in NZ) for four years after 7k down.  While I could "afford" the payments I now just see it as a huge opportunity cost.  If I can get even 18k for it, I can turn around and do a Jap used import for about 7-8 and bank the rest.. Drop the insurance to liability only..

The main reason I'm considering going car-less completely is in case I find the right opportunity back in the US I won't have to worry about selling.. Hmmm.

@Runningtuff

I'll be honest, I almost blew that recommendation off because you can't really get at the money till 65.  I just checked though and found out something very interesting; You can withdraw the money if you move away from NZ "permanently" after one year.  As a US citizen that is very easily accomplished for me.. My main concern would be if they changed the laws around that out from under me.  It looks like they have changed quite a few over the past decade in regards to savings and superannuation, and not necessarily in the individuals favour..  Thoughts?

For anyone not familiar with Kiwisaver I can contribute and my employer is obliged to match up to 3% of my salary.  Sounds great right?  Well, usually you can't get anything out until 65 years old, illness, financial hardship, or you're buying your first house to live in :|  Not exactly the best early retirement option for most Kiwis, but I guess I might have an easy loophole..


So what am I looking at here short term?  Should I just get a vanguard acct and start doing index funds?



P.S. I'm also testing the waters with working from home this week.  Will see how my employer gets along, haha :)
« Last Edit: April 21, 2015, 06:16:48 AM by LoneStar »

velocistar237

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Re: How to Start
« Reply #5 on: April 21, 2015, 06:35:32 AM »
Research how a Traditional IRA, Roth IRA, and SEP would work for a US citizen in NZ. It seems like the Roth would be straightforward, but I don't know anything about NZ tax law or US tax law for expats. Definitely open a taxable account, but maybe hold back a little bit of money until you figure out the US retirement account details, so you can make an IRA deposit.

I would get the employer match. Worst case, you don't access that money until age 65. Still worth it.

So you walk to work and the grocery store? Do you have a bike? Sounds like you could get rid of the car. If not, definitely upgrade the car to a more sensible one.

Looks like you're in good shape.

Prairie Stash

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Re: How to Start
« Reply #6 on: April 21, 2015, 07:35:17 AM »
3% match is awesome! Invest in it and outside of kiwi saver. After you retire you draw down the private accounts. When you turn 65 the kiwi account will fill the hole in the private account.

Age restrictions won't matter.