Making choices my future self will thank me for
I’ve been thinking lately about how I might achieve FI, given that I’m starting so late in life. All the reading I’ve been doing of other FIRE blogs has provided a lot of food for thought. Ultimately, though, I have two basic choices – reduce my spending or increase my income.
Now, the idea of doing more work on top of my full time job doesn’t appeal to me, I have to say – not because I don’t enjoy it, but because it already sucks up enough of my time! And getting a raise is dependent on enterprise bargaining and Industrial Relations Commission decisions, since I’m a state public service employee. I’ll probably look at trying for another promotion in the next couple of years, but it took so long to get my most recent one that I’m pretty much over addressing key selection criteria. However, there are likely to be opportunities to perform higher duties, and the extra I earn will go towards my Mojo/home loan. I’m also thinking about selling some of my clothing that I no longer wear – I have a lot of nice pieces that are still in good condition, and there are Facebook groups where secondhand items in my favourite brand are bought and sold, as well as a relatively regular local market for secondhand plus size fashion that I need to suss out.
Reducing spending is the option that I can most easily experiment with – if I’m being honest with myself, I need to do this anyway. I’ve done it before, when I had my ‘retail-free’ year, so it’s a matter of taking the spending reduction further than I have before. And having recently read through the entirety of Frogdancer Jones’ blog (yes, it took a few evenings of dedicated reading!), something that she mentions in a number of her posts is that something she’s doing now is about looking after her future self. This resonated with me in a way I wasn’t expecting so, with that in mind, I’m challenging myself to increase my savings rate during the 2019-20 financial year. This will also align with my plan to start properly tracking my net worth and doing updates here.
One thing that’s going to have to be drastically reduced is my eating out/takeaway spending (this is one of the main reasons that I need to do this, as it’s gotten a bit out of hand in recent months). This is a good area to target, though, and should have added benefits for my waistline and ultimately for my health. Fortunately the clothing-buying is well under control these days! That was quite a significant expense at one stage. One thing I won’t be doing, though, is growing my own food. I know a lot of frugal living devotees advocate doing this but, sadly, my track record with plants bears a close resemblance to this (skip to 1’25” if you want the short version):
I do have a tendency to sometimes splash out on items at the supermarket that really aren’t necessary, so part of the challenge will be to stick to my shopping list – and not putting anything on it that I don’t actually need 🙂 . One thing I’ve already started doing is using gift cards that I buy at a 5% discount through the union, so I’m saving 5% on all my groceries. And my alcohol – I’m not going without my wine! Or my gin. Or my scotch. 😀 (No, I’m not an alcoholic! But I do like a glass of wine with dinner on the weekend, and I love trying out different gins. And, let’s face it, sometimes you just need a scotch to warm you up, even here in sunny Queensland.) I’ve also started investigating Aldi as an alternative to the big two players in the grocery market.
At the moment, being a good little Barefooter, I save approximately 32% of my post tax income (PTI) – a little over 10% in my Smile account and the other approximately 22% in Fire Extinguisher/Mojo, which is parked on my home loan to reduce the interest. I haven’t used my Smile money (yet) this year because the trip I was supposed to make last month fell through when I got sick (although I forfeited the $200 deposit for cancelling at the last minute – grrr). My rough household budget for general expenses is a little under 50% of PTI, and the other approximately 9% is my Splurge (which I do happily spend). My Splurge spending could certainly be reduced, and I’d like to see what I can tighten up on the Daily Expenses front, other than groceries.
It’s been very easy to follow the Barefoot bucket system (60% income to living expenses, 20% to debt reduction/emergencies, 10% each to splurging and ‘smile’ (saving for fun stuff like holidays)), but if I’m going to make any real inroads to increasing my savings rate, I need to make a proper budget. I didn’t want to fuss around with apps, so I’ve set up a spreadsheet. I used to do this years ago, but it wasn’t useful as it only recorded what I’d spent. Thanks to Melissa Goodwin at Frugal and Thriving for the blog posts on budget spreadsheeting! Melissa’s system allows for budgeting ahead as well as recording actual expenses, and includes charting options to help see where you’re at. I’m looking forward to trying this out and seeing if it helps me to keep a better handle on where my money is going.
The first change I’ve made is to reduce my Splurge money by just over half, so instead of around 9% PTI, it’s dropped to 4.18% PTI (we’ll see how sustainable this is in due course, ha ha). I’ve transferred the saved Splurge money to Fire Extinguisher/Mojo for the moment, so that has increased from around 22% PTI to a little under 27% PTI. At the moment I’ve made no change to the daily living expenses (58.6% PTI) as I need to work with the budget spreadsheet for a while to see what is and isn’t working.
The other thing that I still need to investigate is making additional contributions to superannuation, and changing my super’s investment mix.
So, what are the rules?
First up, if I’ve already paid for something ahead of the 1 July 2019 start date, then it won’t be included in expenses for the 2019-20 FY; however, any ancillary costs will. For example, I have tickets to upcoming concerts and shows, so things like parking (and the obligatory pre-show drink) will still need to be covered. However, this exercise isn’t about taking all the fun out of life, it’s just about taking out the truly unnecessary.
Other than that, this is about getting into the habit of being more mindful about how I spend my money (and how I save it). It’s an experiment, after all, although hopefully one that will produce a good outcome.
Wish me luck!