Wait, what do you mean how you got started with FIRE? Do you mean FIRE as in exothermic combustion? Careful there laddie, explain yourself.
No sir, nothing as malicious as that – I meant FIRE as in Financial Independence Retire Early. It’s a pretty novel concept and sort of a movement which originated in the USA.
Here in Australia though, I haven’t really heard of anyone achieving FIRE.
Mind you, I don’t expect the ones who have “retired early” to sit home and play Call of Duty all day. I’m sure once you reach a level where you can retire young, you don’t. Life’s too short to sit around shooting virtual zombies.
But how did I start on this journey? Accidentally it would seem, here let me explain.
The very first conversation I had regarding retirement was in Year 10 Commerce. We were mucking around with my friend’s MD player (remember those?) when one of us said that the MD player probably costed around a week’s wages.
This led the conversation to various scenarios and hypotheticals and we ended up trying to work out how much earnings you earn through a lifetime.
None of us really had a clue of what the average salary was or how many years made up a lifetime of work so we took random numbers in the air – $50,000 per year for 30 years.
By that age we could calculate simple multiplications fairly well so knew it amounted to $1.5m.
That’s a lot of money to a 16 year old. I know because I said at the time “that’s a lot of money”.
Of course, it wasn’t until I received my first paycheck when I got a good dose of reality.
My 16 year old self didn’t factor that out of the $50,000 p.a. you have to pay tax and associated levies (e.g. Medicare). Punch it in a simple tax calculator and there goes $10k.
Of the remaining $40,000 – well you have to live somewhere don’t you? Let’s say you rent or pay board, that’s another $200/week gone. So you’re left with $30k (I like working with round numbers).
Out of the $30,000 remaining you have to eat – call it $100/week, that’s $5k a year.
From the original $50,000 – you’re down to half, and that’s not even including any social activities.
Suddenly it will take 60 years to reach $1.5m.
Whoa, 60 years with what I assumed would be a 30 year goal – demoralising stuff.
Naturally though you would hope you’re not on $50k p.a. forever – as you gain more experience and move up the ranks, your earning capacity increases.
This is what happened to me, with each passing year and each new job opportunity my pay incrementally went up.
But I noticed a funny thing – my level of savings in the bank did not rise at the same rate as the level of my pay increases.
That’s when I really began to try and figure out what I should do to accelerate my earnings and reach that $1.5m number faster.
It’s taken me over 30 years but I think I might be onto it:
What do they all mean? Follow this blog and find out!
P.S. The real irony is that now I think the figure of $1.5m is too low to “really” retire – sigh, wish I was 16 again.
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