The FIRE Starting Point – Our Net-Worth


Investing, Strategy / Sunday, January 5th, 2020

What Goes in Must Come Out – NOT!

It is said that if one needs to progress one needs to measure. But to measure we need a frame of reference or a starting point. This is our starting point!

Mr. Fireball & I together, we end up raking in a total of around $11,000 per month as cash that hits our bank accounts. Effectively, that is the sum total of our monthly cash inflow. 

Our monthly expenses however, aren’t that simple to determine. Sure, we have the usual fixed expenses such as rent, gym memberships, internet & phone bills, etc. but there are a lot of variables such as groceries, shopping, eating out or that long weekend which end up leading to huge variations in our monthly bill.

However, on average, it seems that we end up with expenses in the range of $5,500 per month. Interestingly, after our monthly rent, the biggest expense for us was our health insurance premium which came in at a whopping $430 which we have tried to rationalise and it now comes in at $250 per month. The other big ones for us are holidays along with lunch & eating out expenses.

Pro tip: The simplest way to track your expenses is to use a separate account for all your expenses and then at the end of the month, you can categorise them into groups to understand where you spend the most and if there are any groups that you can optimise. Also, keep it simple by limiting the number of expense categories and I am sure you can tell we need to work on that!

Worth Tracking

There are many apps out there that can help you track your monthly spends against your monthly budget such as Pocketsmith, Pocketbook or Moneytree. The catch however is that if you want the calculations to be automated (and who doesn’t!) you’ll have to enter your bank account details into the app. And if you’re anything like me, just the thought of that will give you “privacy” nightmares. Thankfully, the apps claim to have ‘bank grade security’ which does give us some peace of mind.

But more importantly, we have a separate account for our expenses that we believe is our line of defence against prying eyes. We use Moneytree and it has a great free account to help track the monthly outflows alongwith automatic customisable categorisation.

Net Net – Safe to assume that every month we are left with a neat little saving of $5,500.

Assets, Liabilities and Other Drudgeries 

At first when we arrived, we didn’t really bother to invest any of the corpus that we had been saving. In hindsight, I would like to think that we were trying to save for a rainy day, but in reality we just weren’t bothered. Once we realized that we had some $30-40K sitting idle in the bank growing at sub-2%, we realized that we needed to be more active about our investments. This amount also helped us put the barefoot investor strategy in place which suggests having a sum saved for emergency purposes alongwith the purpose specific bank accounts.

Since then, Mr. Fireball has started investing with StockSpot, a “roboadvisor” which offer kind of an investment management with less/minimal human intervention (more on this maybe in a later post) while I have opened an account using SelfWealth and am self-managing my investments. I plan to do a monthly competition with Mr. Fireball’s little robo to see who comes out on top. A finance version of (Wo)Man vs Machine right here folks!

Total Investments & Savings

All our Assets total to around $80k split-up as per the image below. You’ll see that there’s quite a large chunk in cash, which is attributable to the fact that we have only just started investing in earnest.

And, before you ask about Real Estate Investments, one word, Sydney! Instead to burdening ourselves with a mortgage, we have decided to invest in Real Estate Investment Trusts (REITs) instead. For now atleast!

Liabilities

Debt Outstanding – There are typically three types of debt that an average Aussie would come face-to-face with during their lifetime.

  • Home Loan – Because we don’t have any real estate investments, we don’t have any home loans to repay.
  • Car Loan – And because we ended up buying a second-hand car in an all cash deal, we don’t have any outstanding car loans either.
  • Credit Card Debt – We always try to remain credit card debt free. ALWAYS!

Remaining debt free is a key aspect of the FIRE movement and is also an important consideration for both Mr. Fireball & I. We’ll cover this in more detail in a subsequent post.

So that’s our starting point. A combined net-worth of $81,021.

Surround yourself with assets, not liabilities…

Ms. FieryIce

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