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Howdy guys and gals!
What’s going on! I thought I would continue on with another post from our interview series, where we showcase high profile Aussie FIRE and personal finance bloggers.
Alex and Ellie from HisHerMoneyGuide
This time round, we have a husband and wife duo who are both passionate about financial independence!
SO important to be on the same page as your life partner, as these two will show…
Hey you two, so where can people find you on the internet?
We’re blogging on our plans for a high income early retirement at https://hishermoneyguide.com/
How old are you are both and how long you’ve been married?
We’re both 35 years old, and we’ve been married for three years.
Do you have kids?
No children, just one adorable cat called Mittens.
What area of the country do you live in?
We live in Brisbane.
What is your current net worth?
Our latest net worth update pegged us at $2.4 million… But that was pre-coronavirus.
What are the main assets that make up your net worth and is there any debt that offsets part of these?
We count our primary place of residence, stocks, superannuation, and investment properties towards our net worth. Our only debt is on our two investment properties.
Did you pursue tertiary education and if yes, what are they?
I (Alex) did a post-graduate uni course.
What is your current job?
I work in government admin.
What is your annual income?
I earn about $95,000 gross from my salary, and my wife (Ellie) is on about $125,000. Our investment income adds more.
How has your income performed over time. What was the starting salary of your first job, how did you grow your income (and what you did to make it grow), and where are you now?
My first job back in 2008 earned about $26,000 a year full time. I lost my job during the Global Financial Crisis, and went back to university to pivot a little bit and re-skill. After that, I job hopped a few times. Sometimes I moved upwards, sometimes sideways when I saw a blocked career path, and other times I was promoted. I feel I’ve progressed as far as I can without impacting work-life balance too much.
Would you recommend people to pursue the same career path? Would you choose a different job if you could go back?
I think people should chase opportunities and take calculated risks. I was never brave enough to just take an opportunity out of the passion of it. Rather, I went where I saw the best chance of job security and hopefully an improved income. My goal was always to improve my wealth to secure my financial independence.
What tips do you have for others who want to grow their career-related income?
Be good at your job first and foremost, and be prompt to put others ahead of yourself. People appreciate it when you make time for them where possible, and that never hurts when it comes time for a promotion – or if cuts need to be made to headcounts.
What’s your work-life balance look like?
Government jobs provide a level of work-life balance that many private sector jobs don’t, which I’m very grateful for. I manage to stick to regular office hours the majority of the time, which allows me time to spend time with my wife more than if life was all about work.
Do you have any sources of income besides your career? If so, can you list them, how much you earn with each, and how you developed them?
Our biggest sources of income outside of salaried work comes from share investments. Last year in 2019 we earned a combined $48,000 gross (including franking credits) from dividends. Separately, we don’t go into our investment properties on our blog because they’re actually really dull. They earn $35,000 a year in rent, but their expenses across mortgage interest, insurance, council rates, property management, maintenance, etc, cancels that out entirely. They’re essentially cash-neutral (and doesn’t impact our tax either way since the expense write off the income) and slowly working away to pay themselves off in the background. Otherwise, we collect bottles and cans for fun when we go on walk, we do online surveys, blog and get rewards program redemptions, but combined those all add up to nothing noteworthy.
What is your (your family’s) annual spending?
We had total living expenses (outside of out-of-pocket tax) of around $18,000 for the two of us last year. Most people think that’s crazy low – but that level of spending still allows us to be better off than millions of other Australians, while saving a significant amount of money to reach our goals.
Can you break-down the main categories this spending relates to?
You can check out our itemised budget items here, but our biggest expenses are health insurance, groceries, car costs, home insurance, and holidays.
Do you have a budget? If so, how do you implement it?
We have a “budget”, but we’re both frugal so it’s not something we rely on. Instead, it’s just something we use to help us model savings to help us determine what level of investments we’ll be able to have across the years to help us reach our goal of early retirement.
What percentage of your gross income do you save and how has that changed over time?
We calculate our savings rate on a somewhat net basis after tax (though we include out of pocket tax incurred come tax time for cash flow purposes). But last year we saved 88.5% of our net income.
Editor’s note: 88.5% !!! WTF… “faints”.
What is your favourite thing to splurge on?
Shares! But in early retirement, it’ll be holidays.
What has been your investment strategy/philosophy?
It has changed over time, but we’re long term dividend investors at heart. Our goal is to earn enough of a passive income through dividends and rent that enables us to not draw down (ie: not sell) any shares throughout retirement. It might not be the most efficient way of doing things, but it’s arguably the safest (eg: if dividends drop, we can still sell shares if required).
What has been your best investment?
A small cap stock that doubled in price in a month.
What has been your worst investment?
Investing in a stock that went into administration.
How often do you monitor/review your portfolio?
Daily. It’s a guilty pleasure.
How did you accumulate your net worth?
Through brute force of saving far more than we spend, and investing the rest into stocks (primarily) and properties. We’re not overly smart – we haven’t got any secret recipe to financial success. It’s just putting in the time and being willing to save for long enough.
What has been the biggest contributor to your net wealth?
Capital growth and reinvested dividends in stocks.
What has been the biggest detractor to your net wealth?
Our primary place of residence hasn’t gone up in value for a few years. But nothing specifically has made our net worth actually drop (apart from coronavirus! Although the market was arguably overheated anyway).
What are you currently doing to maintain/grow your net worth?
We’re continuing to live an extremely frugal lifestyle that leads to a high savings rate. That’s allowing us to continue to invest regularly.
What money mistakes did you make that we can learn from?
I’ve outlined a few regrets in the past. But my biggest regret is not starting work sooner during university.
How has your wife contributed to your net worth?
My wife Ellie is worth more than I am, and earns more than me!
Do you have a target net worth you are trying to attain for FIRE, will you quit working when you reach this?
Our goal is to reach about $4.3 million in assets by the age of 45. However, that net worth goal is semi-arbitrary. Aside from being able to afford our dream home, our real objective is to have enough assets to earn a passive income of around $150,000 a year without needing to draw down on our capital. It’s that income number that will dictate when we retire early. However, those numbers may change over time a little bit, but that’s the goal we’ve set ourselves that we know without any shadow of a doubt will allow us to have the lifestyle we want.
What are your retirement plans?
Our most expensive time sink in early retirement will be travel. We’re hoping to be able to travel for upwards of 5 months a year, with most of it being overseas. At home for the rest of the year, we want to volunteer to causes we care about, and have leisure time for hobbies and sports. If anything, we fear we won’t have enough time.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
We’ve also written about this before. There are things like ageing parents that will be a problem regardless of what we do. The other concerns are choices – the lesser of other evils.
How was your childhood? Was your family wealthy, middle class or low-income?
My family were quite low income. My dad never really worked apart from occasional casual work, and my mum had a fairly low full time wage. We weren’t in poverty, but times were tough on occasions. I had a fine enough childhood though – I’m an only child and my parents loved me, so I did far better than many others.
How did you learn about finances and at what age did you “get it”?
Because my dad never really worked ever since I was on the scene, he never understood the value of money. He was certainly quite good at spending it though. So instead I saw my mum working hard, and she explained pretty well why I couldn’t have certain things. I learned a little bit about finance in school, but it was really through my mum that I became frugal. I really don’t know at what age I wanted to save money – but I always did.
Who inspired you to excel in life? Who are your heroes?
I had pretty Spartan plans for early retirement until I met my wife and aimed higher towards something that I didn’t think was possible before, and that’s a pretty special feeling to have.
How do you think differently than the average person when it comes to money?
It starts with the age-old ‘a penny saved is a penny earned’ mentality for being frugal. But the biggest difference is that the plans for a high income early retirement that my wife and I have for that saved (and invested) money go beyond what most people would even consider to be possible – but it certainly is.
Do you give to charity?
We don’t donate to charity currently. Rather, our goal is to spend a significant amount of our time in early retirement towards volunteering to causes we care about. And the sooner we save/invest the money we need, the sooner we’ll be able to donate our new-found time.
How do you plan to distribute your wealth?
We don’t have children currently, and if we pass away without children, the goal is to donate our entire estate towards charities.
What does money mean to you? Should everyone pursue it?
I wish I didn’t have to deal with money – it brings out the worst in people. But money runs the world we live in, and if you want to live life, you need to deal with money to at least some extent. However, if you are honest with yourself and your life goals, you can obtain enough of it to make it work for you and achieve your dreams.
Finally, is there any advice you have for The Frugal Samurai readers regarding wealth accumulation?
Success isn’t an overnight endeavour and you aren’t owed it. Pay your dues and be prepared to take your time acquiring it.
Wow, incredible insights methinks!
Thanks for completing the questionnaire Alex (and Ellie)! If you want to check out their blog, you can do so at hishermoneyguide.
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Great read – I always enjoy getting to know other bloggers a little better, especially those well ahead of myself.
The Frugal Samurai
I agree, these two take it to the next level!