You have no money here

When I first started saving the best trick I ever pulled on myself was to simply have no money.

ring ring
"Hey Dad, how's work going?"
"Good, what do you need?"
"Can't I just call because I want to talk"
"Generally not, we do that when I get home, so what do you need?"
"Okay, you're on to me, I'm a bit short on cash, can you transfer some money over for me?"
"No worries, how much do you need?"

Every week I would get paid, and every week I would transfer my paycheck (minus $200) into a savings account and pretend it didn't exist. This left me with $200 a week I could carelessly spend on anything I wanted, and as a teenager living at home who wasn't asked to pay board, $200 was a lot of money. It funded energy drinks, bus tickets, text books, coffee, day old half price sushi, fast food, video games, and anything else I could imagine. Almost.

This was back before phone banking, so I couldn't get to that money when I was out and about. If I saw a really cool jacket at Midwest Trader (a bricks and mortar version of Hot Topic if anyone remembers that place) I could generally afford it, but I also knew I might have to skimp on coffee for a few days, something I would never do.

Once or twice I would call my dad and ask him to shift some money so I could make a big purchase when I spotted it on special, e.g. when I found a Playstation 3 for $100 off. Yepp, that opening phone call with my dad wasn't begging for his money. The Bank of Dad had the password for my accounts so when I needed some money moved around, Bank of Dad was there to save the day. Sometimes he would grill me on my purchase, but he never refused to move my money. After all, it was mine and the Bank of Dad could see that most of my money stayed in my account.

Invisible money never stopped me from buying the things I wanted, but it stopped me from buying the things I sort of wanted. Knowing I had to ring my Dad and interrupt him at work for the extra cash always made me stop and think about whether this shiny new thing was really worth all that trouble, and nine times out of ten it wasn't.

I even remember calling Bank of Dad one time to ask for another $100 to be shifted to my debit account because I was going clothes shopping. When I came home he asked what I had bought and the answer was nothing. After all the trouble of hassling Bank of Dad nothing I came across that day seemed worth the hard earned cash.

With this super basic savings technique I put aside $20,000 in 2012 when I was only 21. At the time I was a full time student studying an hour away from home, working at Hungry Jacks (Burger King for any American's reading this) and funding a negatively geared rental property where the costs exceeded the rent return. This was before budgeting, and before I tried any version of tracking my spending. The simple trick of 'out of sight, out of mind' let me save more than 50% of my income for years and put me in an excellent position to be able to analyse purchases and decide whether I sort of wanted it, or I really wanted it.

You have no money here

When I first started saving the best trick I ever pulled on myself was to simply have no money.

ring ring
"Hey Dad, how's work going?"
"Good, what do you need?"
"Can't I just call because I want to talk"
"Generally not, we do that when I get home, so what do you need?"
"Okay, you're on to me, I'm a bit short on cash, can you transfer some money over for me?"
"No worries, how much do you need?"

I just shredded my first credit card...

...so I could open more!

I've been slowly trying out the world of travel hacking. I started last year with a small, not fee credit card and scored 10,000 Velocity points. Now I'm juggling three credit cards, with an expected return of more than 230% value.

Wait, what is travel hacking?

Travel hacking is (very basically) leveraging rewards programs to travel on the cheap. Many credit cards will offer massive sign-up bonuses that will generally pay for a flight or two, maybe some hotel reservations. Travel hacking deserves an entire blog or three to itself, which I promise to work on writing later. In the meantime, check out the related links at the end of this post.

For now, the short summary is Open a credit card, meet the minimum spend for bonus points, shred the card. Rinse and repeat. There's some important rules around how opening cards affects your credit score, and figuring out if annual fees are worth the cost, but I'll cover that another time.

Aren't credit cards the devil?

Let me be really blunt. If you don't have 110% control over your spending you do not have a credit card. Period. No questions, not wiggle room. Credit Cards are dangerous. They are like fire, really nice to look at, kinda warm and comforting, and a raging destructive blaze waiting to happen if you take your eyes off them. A carefully managed campfire is a nice place to sit around, cooks your food, provides a little bit of light in a dark place. But if you try and build up a big bonfire because it's super pretty, you are going to quickly run out of fuel. Even worse you might lose control and set the whole campsite alight, doing hundreds and thousands of dollars damage.

That's definitely not an exaggeration. I put a month worth of bills on my credit card, and the statement came back to say if I made minimum payments I would spend $5,908 and take 39 years to pay off the card. That was just using the card lightly for monthly bills. If I had maxed it out the card it would cost me $55,000 over 50 years at minimum repayments.

Of course, if I pay off the card in full each month, I only pay for the things I bought. As it should be. It also means that I get to leave the money in my offset account for a few extra days. $1,000 in my offset account saves $3 a month. It might be a small amount, but it knocks $1,000 and a month off my overall loan costs. Just by moving money around in smart ways I 'made' $1,000.

So, credit cards are not the devil if you pay them off in full, every month. If you have even a snifter of worry about making the payment, do not open the card. Credit cards are not a magic tool to delay payments till after payday, that's just a way into unending strife. 

And you don't buy shoes with them... 

So why did you shred one?

I'm also attempting to delve a bit deeper into property investment. At this stage I have a amazing credit score, according to Credit Savvy, which is a free site to check your credit score. As a free site I worry that it's not doing the deepest search, but as it's returning a credit score of over 900 I'm not worried too much. Even a 20% variance in that score would still leave me sitting over 700.

So while I'm not concerned about the hit to my credit score from opening and closing cards (yet), I do need to watch the amount of debt that I'm carrying. When you apply for a mortgage, banks will assume that you are going to use all the credit available to you. If you have $25,000+ of available credit the banks will assume that you are going to use it all when calculating if you can manage the repayments of the mortgage. While you might be someone who pays off your card in full every month, the banks always consider the worst case when considering if they want to offer you a loan.

So by closing a card, I might take a bit of a hit to my credit score, but I also lower my 'risk' in the banks eyes by having less credit available.

Okay, so how does this work out to 230% return? 

I've only opened one card with an annual fee, so I'm counting the 230% on that card alone. My BankSA Platinum card has charged me a $99 annual fee. Once I have spent $2,500 they will pay a bonus 30,000 Qantas Frequent Flyer points to my account. Those 30,000 points translate to roughly $230 worth of flights. $230 / $99 = 232%. Once I have those bonus points applied to my account I'll set the card aside and look for another opportunity. When the card is a few months old I will close it, so I'm not going to pay the annual fee again. Keeping the card open for longer will mean less impact on my credit score long term.

It's important to crunch those numbers before you start though. The cheaper Bank SA card offers 10,000 points for $79 fee, which only gives you about $76 worth of flight, and then the more expensive card is 30,000 points, but a a crazy $279 fee! That works out to $230 of flights, that you paid $279 for. Bzzt, no thanks. They do offer some fancy things like a 10% bonus on points earned on your birthday, and two lounge passes which might be valuable enough for you, but they don't cut it for me.

On top of that one card, I also have two others that are fee free that have made me 50,000 Altitude Rewards points, and 20,000 Velocity Frequent Flyer points. Hopefully between all these points I'll be able to take a couple of short trips around the country for free (or at least super cheap!) this year.

Oh, and all the 'money' that I make through these points is completely tax free. 50,000 points is equal to about $230. If I had earned $230 at work I would have been slugged $75 in taxes for it.

In a nutshell, credit cards are designed by banks to make them money. They throw in all kinds of crazy offerings to try and get you to sign up in the hopes that you will make a mistake somewhere and end up paying exorbitant amounts of money to them. But if you carefully game the system, you can come out ahead.

Related links

Travel hacking sites to kick-start your journey:

• Points Hack - Australian
• Travel Miles 101 - American

I just shredded my first credit card...

...so I could open more!

I've been slowly trying out the world of travel hacking. I started last year with a small, not fee credit card and scored 10,000 Velocity points. Now I'm juggling three credit cards, with an expected return of more than 230% value.

Sudden (tiny) windfalls

I just scored a couple of tiny leg-ups towards my $20,000 by July goal. My tax variation went through, and my interest rate on my loan has dropped meaning my required repayments have also dropped. Naturally I'm headed straight to the shops for new shoes!

Ahaha, yeah, definitely joking there. Although I have a rather impressive shoe collection (mostly Converse) and no idea how I ended up with 20+ shoes I would never get excited about buying shoes. Last time I had to replace my shoes I found the exact same pair I had just worn through for $12, so I bought two pairs. That's how I feel about shoes.

But I did hit a couple of windfalls, although I'm using the term quite loosely because I actually had to go chasing these wins. Unlike the Latte Equation, these are ongoing wins from a once off piece of work.

Tax variation

Let me open with the fact that I do not recommend this unless you like swearing at online forms, doing everything twice and using Internet Explorer. This process was a giant pain, but since I've owned my rental for almost six years now I was able to reference old tax returns while working through it. I had a stretch without tenants this year (about 2 months) and I shelled out close to ten grand on renovations and repair work that the previous tenants never bothered to mention. Minor things like the sliding door not rolling smoothly, or the fan being old and rattly. The sort of things that could have been maintained over six years for a small fee that all happened at once. Urgh.

In short I knew my income was down this year, and my expenses up. Rather than waiting for my tax return and getting a lump sum back I decided to fight with some horrendously unfriendly and out-dated forms and request a lower withholding for the year. I had to submit some invoices to confirm I wasn't making up a $10,000 spend, and they lowered my taxable income by almost $8,000.

It's not more money in my pocket, but it means I get pay less tax now and I'll have a smaller return at the end of the year. Since my goal is to have $20,000 before July, I couldn't wait for my tax return.

4 hours work, return $150 a fortnight

Changed to home loan rate

Is your mortgage on a variable interest rate? Stop reading. Right now. Unless it's outside of business hours. Google two or three of the big name banks in your area and have a look at their home loan rates. If it's lower than yours call your bank right now and read this line out loud:

"Hi, I've been looking around online and I can see that Bank Name is offering home loans for interest rate. My current loan with you is higher than that. Anything you can do to help me out?"

Nine times out of ten the person on the phone is empowered to drop your home loan rate right then and there. I strongly recommend repeating this exercise every six months. Banks make an absolute killing on mortgages, it is their number one income stream. They will squeeze you for every dollar they can, so make sure you squeeze back.

I recently had my mortgage rate dropped by .3% which means my minimum repayments have dropped as well. I just received a letter saying they are going to vary their automatic withdrawals from $493 to $477. One less than 15 minute phone call, $16 a fortnight back to me.

If I didn't have savings goals I would probably throw that money straight back at the mortgage. Or into a different investment with a higher return. But as it stands my goal is $5k in a savings account (Done in my December Update) and $15k in my offset account. Overpaying my mortgage or holding the money in the offset account will have the same affect on the amount of interest I'm paying, so I'll take this tiny win and push it towards my savings goal.

15 minutes work, $16 a fortnight

Sudden (tiny) windfalls

I just scored a couple of tiny leg-ups towards my $20,000 by July goal. My tax variation went through, and my interest rate on my loan has dropped meaning my required repayments have also dropped. Naturally I'm headed straight to the shops for new shoes!

The Latte Equation

A favourite of frugality and finance bloggers is the Latte Equation. You can't throw a stone without hitting it, whether it's people saying to ignore the Latte Equation and focus on the big savings, or people talking about whether that $4 a day savings is the basis of a good financial habit, everyone has an opinion. Here's some of my favourite ways to calculate the Latte Equation.

The basic theory

A latte is roughly $4 a day, depending on where you shop. This is a short term happiness boost that is a massive financial drain and represents frivolous spending that could be wisely redirected. That's the absolute basic theory.

Paying down debt

Imagine you spent that $4 a day on your mortgage instead of on a latte. Assuming you only buy coffee on work days, $4 a day, 5 days a week then you are spending $20 a week on the Latte Equation. If you instead throw that $20 at a $300k, 30 year mortgage with a 4.5% interest rate, you can knock 3 years off the repayments. Even more impressive, you save $30,000 on repayments.

Even better (or worse), imagine you have $2,500 in credit card debt. Making minimum repayments this would take twenty-two years to pay off, and cost you $7,600!!! But throw the $20 a week from the Latte Equation at this debt and it will only take you 3 years and $3,243. 

Coffee? Or massive debt reduction?

Investing for the future

In a similar vein, perhaps you have no debt. Or perhaps you're comfortable carrying that debt and you'd rather invest and watch your money grow. Mathematically you're better off investing in the share market for a 7% return (historical average) than paying down a 4% mortgage.

If you choose to invest, your $4 latte could instead be $21,000 in ten years.

Staying sane!

It wouldn't be fair to talk about coffee without talking about the special place it holds in our hearts, and lives, and taste buds, and our ability to deal with people before 9am. Coffee is delicious, warm and my favourite piece of first-world decadence. It is the sweet nectar of life, and without it some of us wouldn't be employed at all, if you catch my drift.

Scientifically, you are actually addicted to coffee! Congratulations! Coffee increases the speed of signals travelling through your brain, giving you that increased pep. Unfortunately our bodies don't like being pushed out of alignment like that and they compensate by creating more neural blockers to slow those messages. At first it works nicely, you drink coffee, get some pep, then the coffee wears off. But your body builds a resistance by creating those neural blocker so you need more and more coffee for the same pep. Then if you try and cut back, you find that those neural blockers are still in place and you feel slow and sluggish. Your body will remove them to bring back its equilibrium, but you'll feel pretty meh during the process.

When asked to give up their daily coffee most people recoil in horror because coffee is life. As a coffee drinker myself I can't argue with that, but I can offer alternatives...

Reduce, replace, remove?

The easiest calculation in the Latte Equation is always simply removing the offending item (coffee) and doing something with the money saved. Of course this ignores the human element, which is why I offer you the alternatives of Reducing and Replacing.

Reduction is simple enough in theory, if not in practice. If you're buying two coffees a day ($40 a week, $53,000 and 5.6 years off your mortgage!) start with dropping down to one a day. Maybe trick yourself by drinking a cup of decaf if you're desperate enough. You could also swap a cup of coffee for a cup of tea, which costs significantly less but only contains 1/4 the amount of caffeine. Bonus points if your office supplies free tea supplies.

Replacing your delicious barista brewed coffee with instant coffee, tea or *shudder* decaf will save you about $15 a week, but it doesn't hit the pleasure centers of the brain the same way. Let's be honest there is a massive difference between instant 'coffee' and a proper espresso. But it turns out making a decent coffee at home is really not that hard.You can buy a decent coffee machine for around $200, and then you can make a latte at home for less than a dollar. Within three months you'll be ahead and can keep enjoying delicious cheap lattes for years. The only downside is you'll probably drink more coffee!

Protip - buy a thermos so you can take coffee in to work, out to the park, on a picnic. Anywhere!

Small wins are just distractions from the big things in life

At the end of all this though, remember we're talking $4 a day, $20 a week. There are plenty of people who will argue that focusing all your mental energies on these small wins is a waste. If I spend an hour a day lamenting my lack of coffee, that's an hour a day you're not spending working for a pay rise, building up a side hustle, learning about investments and money management, calling your bank for a rate reduction, shopping around for better utility pricing etc. etc.

A 50 cent an hour pay rise will more than cover the costs of coffee. Calling the bank and getting .1% knocked off a $300,000 mortgage reduces your payments by $6 a week. Pet-sitting pays upwards of $15 a day to snuggle fluffy puppies. Purchasing another rental should be able to create a 5% return with less than an hour a week ongoing efforts. If all your energies are focused on reducing a $4 a day expense, you might be missing the big ticket items.

And of course, the Latte Equation can be applied to other things in life. Gym memberships can be swapped for going outside saving you $18 a week. You can stop visiting the vending machine and prep your own snacks, putting $15 a week back in your pocket. Friday night beers can be reduced to two instead of three for a $5-10 saving. Getting off the bus and riding a bike can save you almost $40 a week. The world is your (expensive) oyster and the Latte Equation can be applied everywhere!

The Latte Equation

A favourite of frugality and finance bloggers is the Latte Equation. You can't throw a stone without hitting it, whether it's people saying to ignore the Latte Equation and focus on the big savings, or people talking about whether that $4 a day savings is the basis of a good financial habit, everyone has an opinion. Here's some of my favourite ways to calculate the Latte Equation.

The retirement income myth

Something that endlessly frustrates me about commercial financial planners and retirement gurus is the dodgy maths that they pull. It goes something like this:

"Hello! Welcome! How many of you are prepared for retirement? Did you know that if your combined household income is $100,000, then your after tax pay is roughly $85,000. Do you know how big your investment portfolio needs to be to support an $85,000 income? At least $2 MILLION!! Now let me do some quick maths to show you how you could never save your way to $2 million and you need my special product I'm selling!"

bzzzt, wait, hang on, back that up a second.



These retirement gurus are running a basic calculation that looks something like this:

Current Household Salary minus Annual Tax equals Required Retirement Income 

Let's poke some obvious holes in this with two concepts, savings, and pay rises.

Savings

The first and most obvious is savings. It turns your equation into this:

Current Household Salary minus Annual Tax minus After Tax Savings/Investments equals Required Retirement Income

These retirement gurus tell you that you need $85k income in your retirement. They then tell you that if you put aside $20-30k a year into their investment program, you'll be able to achieve that $85k income in 10-15 years.

Now, hang on a second, riddle me this. I earn $85k a year and I invest $30k, then I must be living comfortably on the other $55k. I then retire and I'm making $85k a year, and I no longer need to push money into my investments. What am I supposed to do with that extra $30k a year? That money will pay for a super fancy round the world trip in year one. I buy a couple of jetskis in year two. In year three I might pay a friends medical bills. Year four I decide to buy a racehorse.... I mean, there are things I could do with an extra 30k (55% more money than I've ever spent in a year!) but how many of those things are worth the extra years I spent at work to get here? Paying my friends medical bills would be. A round the world trip would be lovely, but there are so many people out there doing it on $10 a day, I don't think I would need ten times that amount on top of my already pretty nice income.

If you're sitting across from a retirement planner and they're talking about replacing your income and he/she doesn't consider that difference between you're living costs and your savings, you should be raising an eyebrow so high you get a muscle cramp in your face. Then maybe run. Or be less dramatic and take their advice with a hefty pinch of salt.

Getting a payrise

Say we believe the retirement guru, we need to replace our entire after-tax income. This is the be all and end all goal. Well then there is a slight problem with getting a pay rise. This becomes really obvious when you plug some values into the equation:

Current Household Salary minus Annual Tax equals Required Retirement Income

$100,000 minus $15,594 equals $84,406

Required portfolio (at 4%) = $2.1million

But then you've been working really hard, pick up a $20,000 p/a payrise and suddenly the equation looks like this.

Current Household Salary minus Annual Tax equals Required Retirement Income

$120,000 minus $22,094 equals $97,906

Required portfolio (at 4%) = $2.4million

Hang on a second. I'm earning more money, and now I'm further from retirement? How does that work? Well if I was spending 100% of my income on living and not saving a cent, then it would. If I took my $20k pay rise and matched it with a bad habit of going to the races and throwing it all away on the long odds horses who never won (because I have the worlds worst luck) then sure, now I need more to retire on to support this habit.

But if I'm already actively considering my retirement, then I'm not going to blow my $20k pay rise and push my retirement further away. I personally would take a little but for myself (maybe $2k a year) and throw the rest a bringing my retirement date closer. Obviously this all depends on your circumstances. If you were struggling to stay above water you might need to take $5-$10k to have a comfortable life. If you were already thrilled with your life you might throw the whole lot towards retirement. But just because you are earning more now, doesn't mean you need more in retirement.

Putting it together

I'm not going to say throw the baby out with the bathwater. Most financial planners aren't vindictively trying to hold on to you for longer. Some are and you should run very fast and very far. Some just don't differentiate between your income and your expenses. They are probably the kind of people who think that more money would make them happier. They might have higher expenses than you. I sat at a conference yesterday where the presenter outlined a portfolio that would return $160k p/a in ten years, and then said "Hmmm, $160k, that's not much is it" and everyone agreed! $160k would pay for my lifestyle three or four times over! 

This doesn't mean I'm going to completely reject his advice on how to get that $160k portfolio. But I would be completely satisfied with half that amount. This doesn't make his advice wrong, it just means I need to tailor it to my situation. He then went on to show how to use that portfolio to create an income of $250k p/a. Not sure how many jetskis and racehorses this guy is planning to buy, but I'll be content with getting my free time back, retiring early and alternating between taking long holidays and chilling out at home with my cat. 

The retirement income myth

Something that endlessly frustrates me about commercial financial planners and retirement gurus is the dodgy maths that they pull. It goes something like this:

"Hello! Welcome! How many of you are prepared for retirement? Did you know that if your combined household income is $100,000, then your after tax pay is roughly $85,000. Do you know how big your investment portfolio needs to be to support an $85,000 income? At least $2 MILLION!! Now let me do some quick maths to show you how you could never save your way to $2 million and you need my special product I'm selling!"

bzzzt, wait, hang on, back that up a second.

Cheaper than Chips!

I am pretty much permanently hangry. I love food. I also love working out, so I'm that person you see constantly eating but skinnier than a rake. Sorry not sorry, because I'm also that person doing 60+ push-ups / crunches and over an hour of cardio each day. You just don't see that part. But all this exercise and my young-person metabolism means I'm always hungry. And a quick trip to the vending machine every day could easily cost more $20+ a week.

The chips in the vending machine are $2. The chocolates are $2.20. Pricey, and not going to hit the cravings, I would generally want chips and chocolate and still have the munchies. So instead I went hunting for snacks that were cheaper than vending machine chips. Here's what I found...

Roast Peas

Defrost frozen peas or grab a can and drain them. Use a papertowel to pat off the excess moisture. Dump the peas in a bowl, drizzle with olive oil, sprinkle with garlic powder and a bit of salt. Bake at 180C for about 45minutes.

2 cups of peas cost me about 65c and makes 2-3 days worth of snacks. They're delicious, but also fiddly enough to stop mindless snacking.

Roast Chickpeas

Drain and dry a 400g can (or cook your own). Dump them in a bowl with olive oil, 1 tablespoon of cumin, 1 teaspoon of garlic powder, 1/4 teaspoon of chilli powder (more if you like them hot, I don't) a little salt and pepper, and a pinch of chilli flakes (optional).

$1.25 - you get about the same amount as 2cups of roast peas, but they're much easier to eat so these disappeared much faster.

Fruit

I work near the markets, so I can generally get apples, bananas, mandarins, peaches, etc for under $2 a kilo. If I'm lucky I hit on 99c specials. No list of budget desk snacks is complete without mentioning fruit.

I'm not recommending dried fruit though. I don't find it very filling, it can give you a sugar spike/crash and it's pretty pricey. Eat the whole fruit.

Homemade veggie chips

Kale chips - $2 for a bunch of Kale, sprinkle with oil, salt and parmesan, bake until crunchy.

Zuchinni chips - dip thin slices of Zuchinni in eggwhite, then breadcrumbs, parmesan and salt n pepper. Bake until crunchy.

Potato / sweet potato - thin slices, oil and salt. Bake till crispy. Consider a sprinkle of paprika on the sweet potato!

Honestly, just jump on google. The delicious things you can do with veggie chips!

Porridge

Especially in winter. I can get whole oats for $3 a kilo, add a sprinkle of dried fruit ($15 - $20 a kilo, depending on what you get) and you can have second breakfast for under a dollar. Especially great when work provides free milk for tea and coffee (and my breakfast, muhahaha!)

Another great porridge option is stewed apples. When apples are on super special at the markets, but they don't look nice enough to just munch on I dice them roughly and toss them in a pot with just enough water to cover them and simmer (lid off) until they're soft and squishy. Add a sprinkle of cinnamon to the resulting apple goo and you have a delicious addition to porridge, or the base for a quick and simple apple pie.

Cheese

Cheese isn't generally cheap cheap, but if you keep an eye out for special you can do quite well. I picked up a 300g wedge of edam cheese for $2. It's the same stuff that's in Babybel cheeses, but for a fraction of the cost. Did you know those things sell for $46 a kilo in the supermarket! Holy hell no! For that price I want something from France, aged five years and blessed by the Pope!

Protein balls

Depending on your recipe these can be bland or decadent, frugal or overwhelmingly pricey. Keep an eye out for special on nuts and keep the pantry stocked up.

Here's a delicious one: 1 cup of nuts (I used almonds and walnuts generally), 1/3 cup of cocoa powder, 9-10 Medjool dates (soak in water first to soften) 1/4 teaspoon of peppermint essence. Toss in a blender and slowly add 2 tablespoons of maple syrup. When it starts to look like tar you're good to go. Sometimes you'll need a little more or less maple syrup. Top tip, grab a bowl of water an damp down your hands. It will keep your hands cleaner when you roll balls. Or just roll the dough out between two pieces of baking paper and cut into protein 'bars'. 

Depending on your ingredient costs this batch can cost $5 - $7, but you generally only need 2-3 to make a snack, so they work out around 50c a serve.

Muffins

Bake yourself something! Flour and sugar are all stupidly cheap. Milk, butter and eggs are a little pricier but still not breaking the bank. Add a little vanilla essence, some sultanas or choc chips and you've got muffins. For roughly $3.50 worth of ingredients I can make 24 small muffins, making them about 15cents each.

Tupperware!

Wait, what? LadyFIRE you can't eat tupperware. Nope, you really can't. But you also can't eat your delicious snack if they're at home in the fridge. Get yourself some decent containers so you can pack up your snacks and take them to work.

Bonus points, we buy jam in glass jars. I've been washing and keeping those jars for two years now. They hold a serve of soup, homemade quince paste, chicken stock, desk snacks, salad... everything. I saw the same jars for sale for $3 each in a second hand store. I buy them full of jam for $4 each. Someone is making a killing there.

Pro-tips

Try and do a bulk cook. The roast peas and chickpeas are super easy but they take a long time in the oven. With my 20 year old oven, I suspect I'm paying more to run the oven than I am for the ingredients. To counteract that, last time I made peas I cooked peas, chickpeas, muffins and chicken (for lunches) all at the same time. It went something like this:

• Prep peas and toss them in the oven with a 15 minute timer.
• Prep chickpeas. When the timer goes off for the peas, stir the peas and chuck the tray of chickpeas in, reset time for another 15 minutes.
• Prep chicken. When the timer goes off, stir the peas and chickpeas and chuck the chicken in, reset time for another 15 minutes.
• Start making muffins! When the timer goes off next it's time to pull the peas out, stir the chickpeas and throw the muffins in. Set the timer again.
• Cook rice (to go with the chicken) and start cleaning. Keep an eye on the timer, next time it goes off pull out the chickpeas and the muffins. Set the timer once more.
• Clean up! You should be doing it as you go, otherwise it's like a kitchen explosion. In 15 minutes the rice and chicken should be done.

Ta-dah! Four items, three with 45 minute cooking times, all done and dusted in 2 hours. The rice and chicken get portioned out with frozen veg for lunches and the peas, chickpeas and muffins make snacks. 2 hours work, roughly $20 and you a full week of snacks and lunches.

Cheaper than Chips!

I am pretty much permanently hangry. I love food. I also love working out, so I'm that person you see constantly eating but skinnier than a rake. Sorry not sorry, because I'm also that person doing 60+ push-ups / crunches and over an hour of cardio each day. You just don't see that part. But all this exercise and my young-person metabolism means I'm always hungry. And a quick trip to the vending machine every day could easily cost more $20+ a week.

I'm buying free time

I've been called some uncomplimentary things, some in jest, some a little more viciously. The worst experience was having a good friend constantly calling me cheap in that joking-not-joking voice. I'm constantly having to remind myself that I'm not squirreling money away so I can fall asleep on a bed of cash. I'm simply buying back my free time.


Remember Christmas when you were a kid? You wake up in the morning, unwrap presents, and whatever toy you got you would spend the entire day playing with. I would read a whole book in a day because I could. Or get a new video game and play it for three days straight. I would regularly forget to eat and when I stood up for dinner the blood would drain out of my head and the room would spin a bit. Because I was a kid, and I didn't need to think about doing the laundry so I had clean clothes for work. Or going on a baking spree to make sure I had lunches and snacks prepped for the work week. I didn't have a nagging voice in the back of my head telling me I should consider using my time to learn more about coding, or updating my resume so I can get ahead at work.

A huge element of my focus on FIRE is to get back to those days. I don't think I'll ever have that childish freedom of barely eating or cleaning for days on end, but I want that nagging voice in my head to go away. If I decide to code up a calculator or two, I want to enjoy the process of making it, and the experience of learning without thinking about if I could leverage that to get ahead at work. I want to disappear into video games for hours at a time without coming out the other end with a vague sense of guilty anxiety about time wasted.

I don't picture my post retirement life spent in dirty track pants inhaling chips and watching daytime television. I don't consider that enjoyable now, so why would I do it post retirement. I also believe golf is the most boring false sport I've ever heard of. But post retirement I look forward to putting a full weekend into building a new chicken coop, and then spending Monday sleeping in and pottering around the house. Sleeping in on a Monday! And then doing another 'weekend project' Tuesday and Wednesday, because why not!

I'm normally quite introverted. After spending a couple of hours with friends playing board games, or just eating cheese and drinking wine, I desperately want some alone time. Once everyone leaves I don't feel deflated by the loss. If the visit was too long for me I almost feel relieved when my friends leave. These are people I really like spending time with, but I'm still relieved when they leave.

So last weekend, when I spent Friday night through to Sunday afternoon with my sports team, I was exhausted. I even took an hour to sit and read a book on Saturday morning, but by midnight Saturday I was ready to call it quits and went to bed early (early for party night anyway! Friday I made it till about 4am). While I had an amazing weekend, and I'll do it all over again next year, and I've been going to this camp for five years, it doesn't feel like a weekend to me. I didn't recharge.

My weekend recharge is normally games, books, maybe a little writing or building something, and a bit of baking or cleaning. Yes I complained about those things at the start, but those contained tasks like cleaning or baking give me a chance to reset, recharge, create something small and simple and satisfying. Without them in my weekend I don't feel rested.

So on top of my post-retirement life being full of learning and creating, I also picture it being so much more social than now. With all my free-time squarely back in my hands, and not belonging to my employer, I'll be able to fit in the boring adult tasks, the irresponsible 14hour gaming days, the learning new skills and I'll still have the energy in my social batteries to spend time with friends.

I could avoid being called cheap by trying to fix these things by buying stuff. Advertising constantly tells me I would be happier and more fulfilled if I bought some mysterious time saving gadget so I could squeeze in the cooking, and cleaning and socialising and relaxing. I think that's bollocks. I'd rather save my money and buy back the years of my life, than spend on a few moments of manufactured 'joy'.

I'm buying free time

I've been called some uncomplimentary things, some in jest, some a little more viciously. The worst experience was having a good friend constantly calling me cheap in that joking-not-joking voice. I'm constantly having to remind myself that I'm not squirreling money away so I can fall asleep on a bed of cash. I'm simply buying back my free time.

Goals Update: January 2017

What an expensive month! Wowzer...


As last month, I'll start with my New Years goals, but the money part is a doozy this month. Skip ahead if you want cash-voyuers.

Do physical fun stuff 4x a week

Still nope. It's the 'fun stuff' that's killing me - I do a quick morning workout, I've expanded the get-home-from-work workout and I bought a barbell and some weights, but that's not really 'fun'. The boyfriend and I went out slack lining twice, but we haven't found the time to go rock climbing. And despite getting a zippy new mountain bike I didn't make it out trail riding. And derby is still heavily theory at this time, yay new ruleset.
Grade: D 

Create something each month

I created two things! Both on this blog. I always want finance calculators to do things a little differently than they actually do, so I made some myself. Check them out

• I made a calculator that helps show how much you need in Superannuation to last from 65 to forever versus how much you need to get to 65 (or whatever age you're allowed to access your Super)
• I also worked out why I'm not a millionaire (yet!). This handy dandy little calculator lets you plug in your recurring expenses (like coffee, gym memberships, the usual culprits) and shows you how much you would have if you stopped spending that and started investing it. It helps show how little changes can really add up!

Grade: A+ 

Apply for one freelance task a week

Well, technically I did this. I applied for six different contracts and didn't get the courtesy of a reply from any of them. I find this to be pretty normal using UpWork. I generally get replies from maybe 1 in 10 applications, and of those less than half translate to actual work.
Grade: B

And now, the money!

Here we go

January Totals

Income

Salary	$3891.98
Sidegigs	$194.40
Home	$600
Investment Property	$1097.30
Dividends	$0.00
Total	$5783.68

Salary

This is a normal 2 fortnights worth a pay. How exciting *cough, not really*

Side gigs

They did not want me to go to work that day

I petsat the cutest little Chihuaha for a couple of weeks over Christmas. He was the most adorable little butthead, super polite, got along great with my cat, never messed in the house and snuggled like nobodies business. He was also a doorbell, but all things considered it was only a tiny flaw in a truly excellent dog. I was a little sad to see him go.

Home

I bought home entirely in my name, but my partner lives here. He pays half of all the bills, plus $150 a week in rent. Pretty sweet deal.

Investment Property

A full months rent! I haven't seen that since September! Also my tenants lease was originally signed for six months at $299 a week. I've now locked them in for a full year at $305 so starting next month this will go up again.

Dividends

No cash dividends paid in January, but through reinvestments I now own 1 more share in the Vanguard Australian Properties fund, 104 more in the Aus Shares Fund, 109 in the High Yield Aus Shares Fund, 39 International, and 12 Australian Bonds. And my Acorns account paid out $4 in dividends. A whopping $4!

Expenses

	Spent	Budgeted	Annual Average
Home	$1,548	$1,250	$1,313
Investment Property #1	$1460	$1,250	$1,668
Personal Bills	$140.99	$142	$89.83
Groceries	$276.67	$200	$191
Pets	$29.35	$25	$12
Derby	$163	$108	$100
Travel	$0	$108	$131
Other	$844	$250	$525
Total	$4,464	$3,333	$4,031

Home

Only a smidgeon over, which is nice considering I paid my home insurance in a lump sum. Covered for the year, so I won't see that bill for twelve months! Whee!
The average is reasonably over budget because I have set an ambitious goal. I refinanced my home loan back in September and it's down a bit over $100 a month. I'm going to have to keep an eye on the utility bills, but I'm pretty confident that I can bring that average down where I want it.

Investment Property #1

Council rates (quarterly) and the Water Bill (every 4 months) decided to fall in the same month. Lucky me.
The average for this property is over budget because of last years renovations. If I removed them from the calculation I'd be smack on budget. I'm not going to take them out to fake the numbers though, I'm keeping it in for a realistic perspective of what the last 12months has cost.

Personal Bills

This is my phone bill and health insurance, it should never change.
The average is low because I upgraded my health insurance to include hospital cover in January. So the average is reflecting the old, lower cover and will steadily come up across the year.

Groceries

Almost 40% over. I have no excuses. I learned to make salad dressing and spent a fair bit on fresh delicious things. I also stocked up on rice, beans and dried fruit which will hopefully last a while and lead to lower costs in February. I'm hanging out for winter and soup. The grocery budget loves soup season.
This average is in line with my goals! Woo! But.... I spent a couple of months on crutches last year when my partner did most of the shopping, that may have skewed things. Time will tell.

Pets

Hey Big Spender! I bought a 20kg bag of chicken feed and 4kg of cat food, which should last two months and 1month each. I figured out how to make my own budgie seed bells which should cut down on wastage moving forward. Store bought seed bells are stupidly expensive, so I'm keen to DIY this.

Derby

Ahh January Derby. I didn't actually pay league dues yet, but I ordered an official shirt so I can be involved in sanctioned tournaments, paid for camp ($35 for two nights, five meals and a whole lot of awesome!) plus the food and drinks at derby events fall in this column. Januarys are generally a pricey month.
The average is behaving itself quite nicely! I only plan to travel once this year, and I think I'll have enough frequent flyer points to cover the trip.

Travel

No travel, no spend. Easy peasy :)

Other

Remember how I said my bike was stolen? Yepp, good times. The bike replacement and necessary accesories (rack for my panniers and commuter lights) was $700. I also had to pay over $50 in bus fares for the few days I was bike-less. So if you take that absolute *insert excessive swearing* out of the equation, I spent $30 at the movies, $30 on two overpriced craft beers, $25 on a set of weights, and $8 on a coffee/networking meeting. Not to shabby.
The average though... is in a terrible place. I paid through the nose for knee surgery last year. By the time Medicare and my leagues health insurance were done, I was still about $5k out of pocket. Hence why I now have hospital cover. Hindsight is a wonderful thing.

Total

Yepp. It was a great month *feel the sarcasm flow*. Even without the $700 on the bike, I'm still over by $400 (12%). It mostly comes from being a big bills month, but I still want to watch it really carefully. The average is also over, so I need to find some changes to bring everything in line.

Savings Goal

High Interest: $5,017.59
Offset Balance: $4285.00
Credit Cards: 1,402.37

Total: $7,088.91
Remaining: $12,911.09 ($2,582 per month)

No, that's not a typo. I have less in my offset account this month than I did last month. Even though my income for this month was $1,319 higher than my expenses. Umm, I'm not sure. I think it might have to do with the way I'm tracking what goes on my credit card. Because I track the expenses when they occur, but it doesn't effect my offset balance until a few weeks later. It's also due to the fact that I only report my mortgage payments as the interest, and I'm still siphoning money off into my Vanguard Investments. I know it looks a little skewif, but I promise I'm not hiding any spending!

Edit: I've backtracked, added credit card amounts and this hand-dandy chart!

See where we were in December.

Goals Update: January 2017

What an expensive month! Wowzer...