Cash Smash

Finding the path to financial independence – Escaping the rat race


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How soon can I reach ‘Financial Independence’ ?

Yes, that is a potato balancing on a calculator. haha i feel this image portrays the confusion and difficulties in calculating future finances. It turns out its relatively easy to calculate when you can retire.

After working out how much you need to retire, and how much you spend per month, we can then make some predictions on how long it will take us to reach the ‘independence’ goal.

The good guys at networthify.com have created the tool to make things very simple to calculate. This particular calculator was very beneficial in the forwards planing of how i dealt with my finances. It gives a good visual on what the parameters do towards FI.

Networthify.com Calculator

It turns out the most important number in your path to financial Independence is your savings rate. Just $100 a week more savings will save 3 years off the FI path. Incredible. If that is not inspirational i don’t know what is.

Have a go, change the perimeters around and see how you can apply this to your calculations. Remember this is based on an investment return of 5% and a withdraw rate of 4% (This can be changed in the settings).

This calculator predicts i will reach FI in 3.5 years. However due to my investment being property it’s difficult to predict. I don’t know the average investment return per year.

Based on my savings predictions, i feel my predicted FI goal will take me closer to 5 years to achieve. Add in the comments how many years you have left for FI.

Happy saving, Kind regards,

D Money.

 

 

 

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Time poor.

This has to be the most time poor I have been in my life. At age 31, working full time, and trying to have a life outside of work. I have been struggling to get to this blog and to finish some of my active projects.

Is this how life is? or am i just making it this way?

It doesn’t make sense to me that you spend more time in the office, with the people you work with, than at home with your family (sleeping doesn’t really count). I spend 7.75 hours a day (work day) sitting next to my work colleagues.

This is one of the main driving forces for my FI path.

I want to leave the 9-5 work life and start a hybrid of something else. Anything else, if it means i don’t need to be in an office.

If only we could save time like we can save money. There is no compound interest on time so use it wisely.

 

Till soon,

D. Money.

 

 

 

 

 

 

 

 


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Too much stuff.

I have too much stuff.

People who know me personally would find that statement funny to hear. I went through a process of culling the amount of things that i had accumulated and it was one of the best things i have ever done.

In 2016, i was living in a shared apartment with two other people. One of the two was not working out in the place and was being evicted, but before they were evicted the other person moved out due to the soon to be evicted person, i found myself in an awkward situation that had me re-evaluating my living arrangements. I had got to a point where i decided i have had enough of living with other people and their mess and moved out.

At this stage i had a plan to build a stealth campervan over the next 6 months, well that plan got reduced to three weeks when my living arrangements fell to pieces.

February 2016 i purchased a VW transporter van and started to plan the interior and plan how i was going to live. I had worked out it would be saving me more than $300 per week just by not paying bills and rent. Not to mention i was already paying for car insurance and maintenance costs. Living in the van would just mean that the maintenance costs would be my equivalent rent.

Moving from the apartment to a van meant that all the things that i had accumulated had to be sorted and culled. You really do not know how much stuff you have until you try and move houses. Wow, what a surprise. i was horrified. I wrote a list of the essentials that i needed and everything else had to be assessed, thrown out, given away, or found a storage spot for it.

I am so glad i had a good friend help me go through the kitchen, he threw away so many things that i probably would have tried to hold on to but if i didn’t miss them and didn’t use them why am i holding on to them?

I remember reading about minimalist and remember a process of dealing with stuff. You look at all of your things and think, would i buy this now?  does it make me happy? if the answer is no, then its gone.  This may be a little extreme, however it does give you a good starting point.

I setup the bare minimum in the van for me to survive:

  • Bed temp (borrowed air mattress)
  • Toothbrush
  • water
  • Sleeping bag
  • some clothes
  • surfboard
  • and a torch.

Everything else, i went through and got rid of, gave away, sold, or donated. The process is very hard and tedious but the feeling you get when done was elating, it feels like a weight has been lifted from my shoulders. less things to worry about, less mess to look at. I highly recommend trying it out. it doesn’t have to be as extreme as me, but assess your things, your thing’s things, and see where you can cut down.

Also living in a van you are very aware of the things you get given for presents for birthdays or xmas… When you have no room, you are very choosy for the things you bring into your home. Do you have a lot of stuff? let me know if you assess your things and reduce a little?

Cheers for now,

D.Money

 

 


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Feb 2017 “Show me the money” – How much do you spend ?

After we have figured out a goal to head towards we need to know how much we spend and how much we can save.

In order to reach the savings goal we need to know where our money goes. Here is my February 2017 summary of spending:

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The -1500 for ‘van build’ was a result of hitting a kangaroo at about 70 km/h that jumped out in front of the van in Thredbo, NSW (Around 5 hours away from Sydney). The excess for my van was 1500. This blew my budget out for this month.

If we take out the $1500 the total for Feb is $1282.7. This is a little ($242.7) over my projected budget of $1040.

There are no rental expenses in my February spending  because, i do not pay rent. Yes, i live in Sydney, no i don’t live at home. The secret here is, i am experimenting with living in a self build camper van. I was previously living in a shared accommodation setup and got sick of dealing with other people’s mess and differing standards of cleanliness. Plus the savings were tempting. I will share with you in the near future the van and how i built it.

Lets hope March works out better. Happy savings,

D Money.


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OK, Financial Independence sounds good, where do i start? – How much you need to ‘retire’.

So i like the sound of Financial independence but where do i start and how do i achieve FI?

The basic principle behind FI is:

  • Save as much money as you can
  • Invest the saved money
  • Re-invest the interest and grow this investment
  • Don’t spend on things you don’t need

You get rich by not spending money.

How much money do i need to retire?

To answer this question we need to know how much money we spend per year and how much money we want to spend per year in ‘retirement’. Once we know these numbers we can then calculate how much money we need to have invested to be able to live on the passive income.

This calculation is assuming our investment is a mix (balanced) of stocks and bonds. The smart people at Trinity University, Texas have completed extensive research(the Trinity Study) into the safe amount of money to take out of your investment to live. This is where the 4% rule of thumb has come from.  This study (Peer reviewed PDF can be seen here) basically worked out that, a conservative 3-4% would be a safe withdrawal rate to take from your total investments for your retirement. Based on this 4% rule of thumb, taking your living expenses and desired living expenses and multiplying them by 25 (1/25 = 0.04 or 4%)

Example:

My current predicted living expenses are around $25,000 pa (more on this in the future). If i want to live at this same level for the next 30 years then i would need, $625,000 sitting in an investment working away for me and creating interest.

My goal for savings should be $625,000. This is assuming i want to stay at this level of spending for the next 30 years.  Once i reach $625,000 i would be able to take out 25000 per year and live on that money.  At the moment 40k a year would be plenty to live on and would be my ideal goal, this happens to work out to be exactly $1,000,000.

The next step and the topic of an upcoming post will be Net Worth, this will determine how far away i am from my calculated goal.

What is your ideal goal? What is your current annual expenses?

Kind regards,

D Money.


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Project Car 001 – 1966 VW Beetle (Bruce)

To kick start my ‘Project Cars’ series i would like to introduce you to Bruce the 1966 Beetle. Purchased in Adelaide and driven back to Sydney. (Epic road trip!).

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As this is a past project and the car has since been sold i will give a summary of the adventure.For my existing projects i will have more update posts as they progress.

I have a problem, I research and watch sales of old cars. I spotted a bargain and an opportunity for a road trip. The bargain was Bruce, he was for sale for around $3-4k in Adelaide. He looked to be in good condition and the owner has fixed him up for a long distance rally to Birdsville, Queensland. If the car can make it from Adelaide to Birdsville and back then it should be pretty sweet for the trip to Sydney (my thought process).

At very short notice, I managed to talk two close friends into coming on a road trip adventure (Thanks guys hahah), instructing them to meet me at the airport in Adelaide on a Saturday morning. After quickly inspecting the car, cash was exchanged and we were off… well it didn’t start right away and took a good 5mins to get started, but then we were off!!

We only had 1375 Km to drive over the weekend in a car that was pushing 50 years old. I knew this was going to be fun.

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As Adelaide hills are famous for the wine productions, it only felt right to load Bruce up with South Australian wines.

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After a stop at a few vineyards we out of Adelaide towards our goal Hay. Bruce, was happy sitting on the highway he was just able to reach 60mph (96km/h) but would slow down considerably going up hills.

Dinner that night was in a place called Ouyen (not pronounced – Ohhuyeeeehhn) where we stopped for the cheesiest schnitzel in Australia at the good old Ouyen RSL club.

Because there was a few holes under the dash and the air temperature started to drop, the interior of the cab was getting very cold. We put the heater on, that pushes air through some pipes in the engine bay past the exhaust to heat the air and then through into the cabin. There must have been a leak in the engine bay because the heater gave off a strong odor of oil (and probably carbon monoxide). This made us feel sick, so we were unable to use the heater.. great.

The wind coming through the steering column and the holes in the dash was making it very very very cold to drive. We switched driving as i was unable to continue and curled up in the back for a nap. My friend Matt and Luke (Navigator) continued to drive the remaining distance to the hotel in Hey, freezing their buts off (i was asleep).

The guy at the hotel was very surprised that we had turned up without hitting a kangaroo. He said that typically people who pulled in this late at night to the first hotel in town had most definitely hit a kangaroo. We didn’t hit any roos, quite scary that, he was so shocked. I assume that we didn’t see many kangaroos because out headlights were so dull. haha we must have been very very lucky. Go Bruce!

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This road trip was so much fun, being able to share this trip with two good friends was a really great experience.

My plan was to overhaul the suspension and drive train to get the car in as good condition I could for everyday use and then think about working on the body. I don’t mind that the interior was a bit old and worn. That gave Bruce a good character. I purchased some second hand knitted grandpa jumpers from Vinnies and if you were to ride in the car you had to put one on.

My dad and I pulled Bruce to pieces and slowly started putting him back together with refurbished parts and new parts I could get online.

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The whole process took us many, many hours on weekends over about 11 months or so. The end result was a registered car with good working parts ready to take on the likes of NSW roads.

I ended up selling the car to a local restaurant owner who wanted to use the car to advertise his restaurant. I still see the car when I return to my parents place on some weekends.

The experience of purchasing a car interstate, the road trip with friends, and building and repairing the car with my dad was so valuable to me that the cost of the car was insignificant. I get along best with my father when he is teaching/working/researching something productive like helping me with one of my crazy project ideas.

  • Purchase cost: $3800
  • Sale cost: $4800
  • Parts cost: Probably close to $2000
  • Enjoyment: Priceless

Maybe the next project will make money?

There are many more projects to list and write about. Have you done a crazy road trip? or are working on a car currently? Let me know in the comments.

Kind regards,

D Money.


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The five laws of gold

I would like to share with you some wisdom i have come across in a book i was listening to.

The five laws of gold – Taken from the book ‘The richest man in Babylon – George s. Clason 1926’.  These laws have stood the test of time and are just as relevant today.

  1. ‘Gold cometh gladly and in increasing quantity to any man who will put not less than one-tenth of his earnings to create an estate for his future and that of his family.
  2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
  3. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in it’s handling.
  4. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those who are skilled in its keep.
  5. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.

I like the lessons George is sharing and fits in nicely with the theme of this blog.  Everyones interpretation may be different, I would like to see how you interpreted the messages, leave your thoughts in the comment section.

Kind regards,

D Money.