Hi all,
Great to see some Aussie Mustachian's around! I found the MMM blog a few months ago, managed to binge read everything before moving on to JColins/Afford Anything and have been reading a few MMM recommended books every other week.
I have just finished reading all 69 pages over the last few days.. thank you so much for sharing all of the helpful information. I have a few questions that haven't been covered and would look to get a second opinion on my strategy if anyone is around.
Age: 23
Debt: 19K HECS
ING Savings (F You Money): 10k
Joint Savings: 5k
Super: A dismal 4k
My questions are:
1. Should I make extra super contributions to make up for the my lost super?
2. Once I hit 15k savings, I plan to save 20k to invest in ETFs (VAS = 50%, VGS 50%) in 2x 10k transactions with Commsec. Continuing to invest quarterly as I can afford. Is this a sound strategy for my current position?
3. I plan to move to London with my S/O in 3-5 years time for 12 months or so (hence the join savings account for the move). Is there anything I should consider in terms of ETFs when living overseas/not earning AUD income? I saw it was mentioned in regards to US, does anyone have any UK specific information?
4. Lastly, I do have some concerns about the property market in Syd/Melb. I can see our population growth won't be slowing down anytime soon, and even though I don't have a crystal ball, I don't expect prices to drop but perhaps stagnate temporarily. I've discussed with S/O and have agreed for the next 5-10 years renting is definitely the better option (we plan to move around due to job changes/looking for a good place to settle long term). While we are happy to rent and invest in ETFs, I can't help but wonder if we are setting ourselves up to fail down the road if we do decide to buy a PPOR. Any tips/insights for things to consider?
I promise that's it. Thanks for reading so far!
Hey,
A few thoughts:
1) Do you need a $15k emergency fund? I read somewhere (maybe MMM) maybe greaterfool.ca that this is kind of unnecessary in this day and age with debt being cheap and freely available. I.e you could get a credit card tomorrow - wrack up $5k of debt, then transfer that to a second card on 18months interest free basis.
Not saying having some cash is a bad thing - just make sure its at least in a high interest account trying to keep up with inflation.
It'd help with providing general advice if we knew how much you earn?
2) I like VGS but has been a bit volatile lately with Trump, North Korea, AUD changes. But those are short term things. Old adage - time in the market, not timing the market. Personally I don't like VAS but that is my anti ASX sentiment. Personally, in line with 1) above, I'd lower the emergency fund and put more into ETFs. They are fairly simple to sell (i.e very liquid) much like actual cash. However much higher potential for return.
3) No idea. US is a bit wacky with their double taxing deal. I think Australia as agreements with the UK that you only pay tax once.
4) My wife and I are in the rent + invest in ETFs camp. Brisbane not Mel/Syd. My tip here is to consider that you're building a diverse wealth base and have amazing flexibility. Unlike someone who has bought a house and has a single asset and is exposed entirely to the property market. Create a spreadsheet that tracks your net worth (super, investments, cash etc). It really helps with convincing yourself you're not missing out by getting a mega mortgage.
At some future point, you'll be able to buy a house with the value of ETFs or keep renting and live of the return. Maybe FIRE where ever you like - not in a house you bought near your work. Or travel the world.
You are setting yourselves up for down the road - just not to fail. Being debt free is awesome. Being a debt slave to a massive mortgage is not.
The biggest test is going to BBQ after BBQ where the only topic of conversation is property. Or having to pretend a friend has made a great decision to buy what you think is a massively over priced property.
I wish I'd started FIRE at 23!
Other unsolicited advice:
Make sure your SO is on the same journey and understand things.
Write a budget.
Track your Savings rate.
Still spend some money on yourself. Treat yo' self
Don't pay of HECs sooner than required.
Live, laugh, love
Dance like noone is watching. (ok those last two were a joke).