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Before I start, can I say that I am feeling RE-FRESHED after what has been a wonderful week of RnR.
Really needed the time off boys and girls. WHEW.
MrsFrugalSamurai took a week off too, so it was great spending quality time together.
Raring to jump back into it next week!
“Rolls up sleeves and inserts mouthguard”.
Today’s post is another episode of our interview series, in which we profile other high flying FIRE bloggers for us to learn about their journey.
Kara from the Flawed Consumer
Ready? Let’s begin!
Hey Kara! How old are you and Mrs Flawed Consumer?
We are both 33. We’ve been married for 6 years, but together for almost 14 years.
Do you have kids?
We have a 5 month old daughter, and two fur children.
What area of the country do you live in?
What is your current net worth?
In the low-mid six figures at the moment.
What are the main assets that make up your net worth and is there any debt that offsets part of these?
Our home is our largest, followed by superannuation, cash and ETF’s. We are only three years into our mortgage, so unfortunately the bank owns around 80% of it. Otherwise, we both have HECs debts, but no other consumer debt.
Did you pursue tertiary education and if yes, what are they?
Yes, I studied at University for a number of years. I have a Bachelor of Environmental Science (Hons), Bachelor of Laws, and an Associate Degree in Information Technology.
What is your current job?
I primarily work in the regulatory/legislation space – with a particular focus on environmental conservation and human rights. I have been working in this space for almost a decade.
What is your annual income?
It does vary quite a bit year to year, as I tend to do a lot of short-term stints in higher roles than that of my permanent position.
Last year it was in the low six figures. But, generally it is in the upper five figure range, and is fairly consistent with the Australian average annual income (not the median annual income).
How has your income performed over time. What was the starting salary of your first job, how did you grow your income and where are you now?
I commenced my first full-time job in May 2012 at a pay rate of $50,097 per annum, plus superannuation of 12%.
In 8 years I’ve pretty much doubled that income through promotions and taking on more responsibilities.
My first full time job paid: $50,097 per annum, or $1926 per fortnight.
Would you recommend people to pursue the same career path? Would you choose a different job if you could go back?
I am lucky to work in a very flexible, and pretty secure job. There’s a lot of down sides, including politics of all kinds… But, there’s more up sides than there are down sides, which is great.
When I went to university, my intention was to become a lawyer. However, over time I observed how little work-life balance most lawyers have. So, I realised it wasn’t for me. Whilst I could make more money in law, the flexible work options and pro-life balance I have is priceless.
What tips do you have for others who want to grow their career-related income?
- Push yourself.
- Step outside of your comfort zone.
- Always seek self-improvement.
- Have a positive, hard working attitude.
- Value yourself properly (don’t let your boss take you for granted).
- Be confident, but not overconfident.
- Loyalty often doesn’t mean anything – so don’t limit yourself by being loyal to an employer that doesn’t value you enough.
- Look after yourself… No one else will look after you enough.
- Your employer is not ‘family’… Remember who’s truly important and who truly values you, always.
What’s your work-life balance look like?
It’s pretty great, most of the time. I work an average of 39 hours per week, consisting of 3 days from home and 2 days in the office. I refuse to work during my lunch breaks, and get out for a 5km run most lunch breaks. I rarely work on weekends, or in the evenings. Overall, I’m very lucky when it comes to work-life balance.
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?
Interest/dividends – around $500 a year at the moment.
Selling second-hand items – up to $3k per year on average.
Website – I’m still in the red overall so far, but usually make a few hundred dollars per year.
Rewards apps – several hundred per year.
What is your household’s annual spending?
If you exclude tax obligations, it’s around $77,400.
Can you break-down the main categories this spending relates to?
$9,100 discretionary spending (takeaway, eating out, alcohol, activities, clothes, subscriptions, toys and clothes for daughter, etc).
$14,880 holidays and home improvements/renovations/breakages.
$7800 groceries – food, toiletries, cleaning, nappies, etc.
$15,720 bills – car maintenance, fuel, phone, internet, electricity, water, rates, insurances, charity donations, etc.
Do you have a budget? If so, how do you implement it?
Yes, we have a 60, 20, 10, 10 budget for our net income. 60% is allocated to living expenses. 20% is allocated to long-term savings/investments/mortgage offset. 10% is allocated to medium term savings, such as holidays and home renovations. And 10% is discretionary spending.
We have our accounts set up to automate our savings transfers each fortnight, and essentially pay our savings first, and everything else after.
What percentage of your gross income do you save and how has that changed over time?
If you don’t include the compulsory 9% superannuation, it is 25.4%.
When I first started working full-time in 2012, our gross income savings rate was around 2%. It increased to around 5% by mid-2017, and has increased by 20.4% in the last 3 years, since discovering the financial independence movement.
We are continuing to try to cut costs, increase income and invest… But, we have just had our first child, so with maternity leave and child care (in the future), increasing that savings rate will be a serious struggle over the next couple of years.
What is your favourite thing to splurge on?
Good quality craft beer.
Editor’s note – don’t we all!
What has been your investment strategy/philosophy?
Diversify and hold for as long as possible. Take the downturns as an opportunity. And, have a decent cash reserve to ride out downturns so that I’m not tempted, or have the need, to withdraw during that time.
What has been your best investment?
A mix of Australian and international ETF’s, which I withdrew from at a 20% return in 2019.
What has been your worst investment?
Several cryptocurrencies that now have no value. Fortunately, I didn’t invest much!
What’s been your overall return?
Well, that’s been highly variable over the years, and types of investments. If you asked me last year, the average would have been around 12%. Today, it’s probably more like 4-5% overall.
How often do you monitor/review your portfolio?
Roughly once a fortnight.
How did you accumulate your net worth?
Savings, investing, paying down the mortgage, and getting rid of consumer debt.
What has been the biggest contributor to your net wealth?
Both of our incomes, combined with a focus on savings and being frugal.
What has been the biggest detractor to your net wealth?
Owning a house… There is always something that needs fixing, repairing or renovating. Thinking into the future, having a child will be a big detractor, due to reduced work/part-time incomes, plus the cost of raising a child. But, she’s worth it 😉.
What are you currently doing to maintain/grow your net worth?
Saving. Investing. And, trying to live and parent as frugally as possible!
What money mistakes did you make that we can learn from?
How much time do you have????
Lifestyle creep. Buying unnecessary crap. Not investing. Living paycheque-to-paycheque. Being complacent and not shopping around/paying full-price. Not valuing my superannuation when young and letting fees eat into multiple accounts.
How has Mrs Flawed Consumer contributed to your net worth?
We’ve been together since we were 19, so everything we have, we built together as a team. I’m very proud of what we’ve achieved together over the last couple of years to go from having net wealth in the low 5 figures, to having net wealth in the low-mid 6 figures by saving, paying down debt, investing… And, most importantly, reducing our unnecessary expenditure!
Do you have a target net worth you are trying to attain for FIRE, will you quit working when you reach this?
For full FIRE, it’s $1.25M. For part-time FIRE, it’s $750K.
What are your retirement plans?
Ideally, we plan to full-time retire at 52 – which is in 19 years time. We are taking a slow approach to full-time FIRE. However, we are intending to do semi-FIRE, by both dropping to part-time work while our daughter is young, so that we don’t miss out on that precious time with her and together while we’re young and healthy.
Are there any issues in retirement that concern you? If so, how are you planning to address them?
Not really. We won’t retire until we’re comfortable that we have our finances in order… And, I have so many hobbies that I don’t get enough time for now, so I have no concerns about being bored, or not knowing what to do with myself.
How was your childhood? Was your family wealthy, middle class or low-income?
For about a third of my childhood we were middle-class. For the other two thirds we were low-income, with my Mum saying that we used to have about $17 left each fortnight after bills were paid and food was on the table.
At 30, I had a financial epiphany and realised that my wife and I’s paycheque-to-paycheque/keeping up with the Jones’ lifestyle was going to result in the exact thing I wanted to avoid for my relationship… Financial stress induced fighting and unhappiness. So, we radically changed our lifestyle to pay down debt and increase savings.
A lot of my family’s financial stress resulted from my father getting cancer and no longer being able to work. So, the need to have a decent emergency account, and significant savings to be able to ride through any storms without significant financial stress is very important to me.
How did you learn about finances and at what age did you “get it”?
Growing up, I learnt mostly about what not to do with money. So, my ‘financial education’ was really observing what approach to spending was best to avoid if you don’t want conflict about money.
As mentioned above, age 30 was when I had a financial epiphany, discovered the FIRE movement, and”got it”.
Who inspired you to excel in life? Who are your heroes?
I think those that inspired me to excel in life the most were my Mum, Dad and Nana, but for very different reasons.
My Dad and Nanna could be quite cruel and used to tell me as a child that I was useless and would never amount to anything. My Dad was particularly cruel when it came to putting me down.
On the counter side, my Mum pushed me to excel and would tell me that I could do anything if I really put my mind to it.
It was a combination of these two influences that pushed me to try to make something of myself by working really hard to get good grades in school so that I could go to university.
Essentially, the belief in myself that my Mother instilled in me gave me the drive to prove my Dad and Nanna wrong… Which I’ve definitely done 😉.
How do you think differently than the average person when it comes to money?
I guess I see money as a tool for freedom. I think that unless you’re in the financial independence/FIRE mindset, you don’t really see it that way.
Do you have any favourite money tools and resources you recommend (books, podcasts, apps etc)?
I am a big fan of Scott Pape’s Barefoot Investor (just like half of Australia!). I’ve read many finance books over the last three years and no other has quite resonated in the same way. It’s also the only finance book I’ve ever been able to get my wife my read too!
For beginner investors, I think investment apps such as Raiz and Spaceship are excellent. In my experience, the investment world is very scary for most people. Investment apps such as these provide an easy platform for the average person to get started, with minimal cash outlay. The financial education emails that both companies send to their app users are really helpful for beginners too.
Do you give to charity?
I give fortnightly financial contributions to a couple of charities. On average, I contribute about 1% of my income to charity.
I also loan money via Kiva to people in developing countries to help them raise enough capital to purchase items that will expand their businesses to improve their income and quality of life.
As we’re still very early on in our financial journey, I only contribute 1% to at least help a bit, but still allow us to save a lot for our financial goals. Part of my desire for FIRE is to increase the time I have to volunteer and make a real difference in the world… So, my long-term goal is to give more time and money to charity.
Do you plan to leave an inheritance for your kids? And/or how do you plan to distribute your wealth?
Well, yes. We do want to help my daughter in life as much as possible… But, we also don’t want her to be entitled and unappreciative. So, I think we’ll put a lot of thought in the coming years into trying to create enough of a balance for her!
What does money mean to you? Should everyone pursue it?
Money means freedom to me. I think it should be pursued to create a better life, but not to the detriment of all else. Money for the sake of money is meaningless, shallow and unfulfilling.
Finally, is there any advice you have for The Frugal Samurai readers regarding wealth accumulation?
It’s never too late to start. But, the earlier you do start, the more you shall accumulate!
Thanks for participating Kara!
Apart from the gold she dished up there, one big thing I took away from this is the importance of having a life partner who is in tune with your financial goals.
It just makes life so much easier when you are both on the same page moving forward.
And together since 19! That is massive kudos.
If you want to check more of Kara out (the blog I mean), you can do so here:
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