Many stories of those pursuing financial independence come from people who have always been pretty good with money.
This can lead newbies to assume that the FIRE movement is only open to a select few financial wizards.
But this is not the case at all! And that’s why I’m so excited about today’s guest.
He’s a 40 year-old guy from Canberra who… well, I don’t want to spoil it! His story is inspirational and that’s why I’ve invited him here to share it with you. So I’ll let him explain in his own words. Hope you enjoy it!
(by the way, he’s using a nickname for privacy, which some of you might recognise from the forum PropertyChat)
I am Orangestreet and I have just turned 40 and on the path to FIRE like many of you. Everything about my story is unremarkable; just like me. Also, spoiler alert – I am not financially independent yet. In fact, I am not even close.
As you will find with my story, unlike most of the prominent voices within the FIRE community, I was not born with a naturally frugal mindset and neither did I start investing until I was past 30.
I have shared my story in the hope that there must be others like me with average intelligence and median incomes who can in just over a decade put themselves on the path towards unimagined wealth and freedom to live life on their terms.
The beauty of FIRE is breathtaking in its simplicity and there is literally no downside to achieving it. By following a well-trodden path, it is nearly impossible to not end up wealthy simply because it is underpinned by the iron-clad laws of arithmetic.
The student years (mid 2000s)
Being an international student in Australia, especially for one coming from middle class developing country households is a brutal existence. There is no HECS/HELP, no handouts from Centrelink and the mark-up on tuition fees is eye watering.
I had taken out a huge loan to pay for tuition. By the end of the 2 years of studies, through extreme frugality and dint of hard work, I not only managed to complete my post-graduation, I got my permanent residency and a full-time job as well.
I did not know it then, but it made an indelible mark on my psyche that I did not need a lot of money to be happy and that I could save heaps (and repay loans) by living like few others are prepared to.
Full time employment – (2007 -10)
It took me less than a week after beginning work to realise that I was not going to be the hotshot I thought I was going to be. Workplaces have a fine-tuned system to cut graduates with an exaggerated sense of self-importance down to size.
Full time work was such a shock to the system as in just a matter of few days, I went from having pretty much all my time to myself to living on the margins of the week. It felt like there was simply no respite from the torrent of work days coming at me like a conveyor belt from hell.
I used to do laps around the office building in the afternoon to shake off the mind numbing ennui and the crushing migraines that I would get. I would often look outside my office window wistfully at the bright blue sky and leafy streets and contrast it to fluorescent lighting and vinyl office furniture and wonder how I got it all so wrong.
I tried everything from taking sick days to going on annual leave. Nothing worked because work always won in the end by the sheer quantum of working days a year has.
I learnt it the hard way that you cannot outrun a working life by distraction. The unrelenting beast that is a full-time work week had me in its vice like grip and released its claws only during the weekend so that I could gasp for air.
Whist my starting salary was just north of $40K, I quickly picked up spending habits from my colleagues. I started using the escapism of travel and consumer purchases to smother the pain of being chained to my desk.
I usually had a coffee in the morning, food court at lunch and sometimes takeaway at night. My previously acquired frugality from my student days was quickly forgotten. It was not so much rewarding myself for having ‘arrived’ but a coping mechanism for having a boss dictate how I spent most of my waking hours.
In a sequence of dumb decisions, I found myself in front of a bank manager who offered me a personal loan for $10K. I was so flattered that I accepted it with no questions asked. To make matters worse, I bought a new car (100% financed!) and the loans kept mounting.
By the time 2010 arrived, I had $48K in personal loans. To my eternal shame, I compelled my newlywed wife, (who I met in 2007 and subsequently married in 2009) to part with $4000 she had diligently saved in her short career so that I could stay on top of the ever mounting loan repayments.
It got so absurd at one stage that I was drawing money out of my credit card to make loan repayments and meet short-term commitments.
Then suddenly, against the run of play, my life turned on a dime through a series of fortuitous events in 2010. I found investing and FIRE (only I did not know it was a thing then).
It was like meeting somebody and then realising they were exactly what you were searching for all your life but you never knew existed.
The pivot – 2010 onwards
When me and my wife joined finances in 2010, I found some respite from the crushing loan repayments through economies of scale of two people earning and living together.
In the meanwhile, I had started a new job and in just over 12 months, my salary nearly doubled. Living with a wife who had decent job herself, managing loans become a bit easier.
While I had not given up on my unhealthy lifestyle of unintentional spending and eating out 3 times a week (albeit at nicer restaurants), the crazy excesses of my single life was over.
In March 2010 during a work day, when I was looking at my credit card statements that something possessed me to copy each line item to a spreadsheet to see where my money was going. I also categorised the spending into different streams.
What I saw was stomach-turning. The sheer scale of wastage was nausea-inducing even by my own wanton standards.
If there is one life hack that I can attribute my financial turnaround to, this would be it.
Once I could measure what was being frivolously
****** up the wall spent, cutting back on areas that did not give me joy was a no brainer.
In another serendipitous happenstance in late 2010, while browsing property magazines at the newsagents, I came across an article titled “how to have a million dollars in the bank.”
There was a case study about how with just buying 2 properties, one could have a million dollars in the bank. I remember being transfixed by that article for days because the path mentioned seemed completely achievable.
To my mind, having a million dollars was for lotto winners. It had not once occurred to me that it could be achieved through sensible investing (I wasn’t kidding about the lack of intelligence).
One thing led to another and I got myself a copy of Steve McKnight’s book. In the book, he had a paragraph which nearly made me cry.
I am paraphrasing but it went along the lines of, “Working in a full-time job is like bonded labour. I have seen my supervisors work so hard for such little reward and so much stress that I have asked myself is this all there is to it?”
All my life I had been told how lucky was have a job and I was somehow ungrateful to have fantasies about escaping the clutches of work. But here was a guy, who for the first time in my life was giving me the vocabulary I needed to articulate my deep frustrations and to put together a plausible plan to escape the prison of full-time work.
Consolidating the gains
Whilst it is hard to encapsulate in a few paragraphs how the change happened, the two examples above went a long way in course correction. Soon enough my loans were gone and late in 2011, we saved enough for a house deposit and bought our modest PPOR (home).
Every single dollar spent was tracked and the simple spreadsheet to capture expenses became a sophisticated behemoth that tracked every aspect of my financial life to the last cent.
I devoured financial books, joined forums and made intentional spending decisions.
In 2012, with a savings rate of nearly 50%, we bought our first investment property. In the ensuing years, we bought two more. We were on track to buy up to 6 properties (even with APRA restrictions) before we changed strategies and shifted to shares.
The power of a high savings rate is so all conquering that leading up to 2018, in spite of shelling out $57K over 4 years of childcare (we had our daughter in 2012) we still managed to save enough to buy three investment properties, recycle all of our PPOR debt and build a decent share portfolio balance.
In between, we managed to go on numerous holidays, multiple visits to our home country and a life of incredible abundance.
It has now been a decade since I started the FIRE journey. Whilst I jumped on the bandwagon for money and freedom, I have stayed on for the vastly improved life that the pursuit of FIRE has bestowed upon me.
Below are some of the key takeaways from my journey so far.
- The difference in lifestyle between spending money unintentionally versus a more considered spending approach is minimal. I hardly felt like I could buy anything and everything during my profligate years and neither do I now feel like I am leading a life of deprivation. We hardly feel like we have lacked much (if anything) and we have had plenty of rich experiences.
- Learning to do one aspect of life well (like taking control of your finances) has positive echoes in different spheres of your life. I have now used the living-intentionally approach towards my health and the pay-off has been enormous. I am healthier and fitter now than when I was 18!
- Frugality is a keystone habit and has made my mind much more organised, disciplined and self-aware. Joining the dots by connecting finance, behavioural traits, economics and politics has greatly enhanced my understanding of the world. It has also made me question aspects of my life which I had taken for granted. For example, I had always assumed that eating out once a week or overseas holidays were mandatory “experiences” that one absolutely must do to have a “meaningful life.” Nothing is further from the truth.
- It is important to choose your life-partner well. Without my wife completely rejecting the zeitgeist of ‘rewarding’ ourselves with overseas holidays at resorts with infinity pools, living in a trophy home and buying ‘nice’ things to feel good, I would have no hope in hell of achieving FIRE. Also, knowing myself, I am aware of the fault lines where I have stumbled in the past. I am far more confident of reaching FIRE due to having a wife who refuses to get distracted from achieving our goals. While it was my vision, enterprise and enthusiasm that propelled us on this path, it will be her steadfastness, equanimity and wisdom that will see us through.
- It takes just over a decade for compound interest to start paying off. I feel like I am now reaping everything I sowed over the decade from 2000 – 2010 (i.e. nothing). Therefore, I have no passive income (at least not enough to meaningfully reduce or quit work). But the hard work from 2010 to 2020 will start to pay off from around 2030 onwards. And the dollars we invest in this current decade, we will be truly thankful for in 2040s and so on.
- You don’t need to cross the finish line to enjoy the benefits of FIRE. A bad day at work – no worries. I just have to remember my financial trajectory and I can regain my perspective of what is truly important. Whilst life is not perfect, I am happier than I have been at any other stage of my life. Being on the path to freedom has made me appreciate how lucky I am to have the job I have. I have found at times, astonishingly, even liking it and deriving meaning from it.
Where to from here
We are at a stage in our life where our finances are on auto pilot. With a savings rate pushing 70%, we just have to resist taking our eyes off the ball and we will coast to FIRE.
If things go to plan, we will have passive income (from shares alone) well in excess of anything we have ever spent. We also need to continue taking steps to mitigate a few key risks (loss of income/health/death through insurances).
At my best estimate, we have another 5 years left to become financially independent (all yearly expenses met by passive income). I will be in my mid-40s and my wife in her early 40s.
Because we believe in what is known in FIRE circles as ‘front loading the sacrifice,” we plan on accumulating a bit more than what we will need. All up, I expect to be retired early by my late 40s (wife mid-40s).
It is highly unlikely that I will be in paid work after I reach FIRE. For me, retiring early is just as important as financial independence. Even a job that involves lying on a beach all day will be tedious to me because it is exactly that – a job.
Thankfully I have a curious mind. I will let my mind wander to explore where it wants to go next and I will provide the time and resources to pursue those interests.
Most importantly, I want to spend the rest of my life serving my wife and daughter in helping them chase their dreams lead their best lives.
Dave’s final thoughts…
What a story! While there are tons of great points, some of the following parts were my favourite…
— At the start, our reader was heading in the complete opposite direction to FI! Many of us start on roughly the right path financially, and ramp up our efforts from there, so it was amazing to hear such a turnaround.
— He’s completely relaxed about the whole retirement thing and wants to see where life takes him by simply following his interests and curiosities. That’s kind of the attitude I took too. For some people, planning is better, but if you know yourself well and can’t imagine being bored, then approaching retirement as an adventure might be ideal.
— He’s actually happier now than ever before, despite spending much less. Many people think this FIRE stuff means sacrifice and pain now for a future benefit. But that’s not the case at all!
— His partner is playing a crucial role in terms of keeping them focused and committed, despite FIRE being his idea. Fantastic stuff.
I want to thank Orangestreet for sharing his personal journey with us. I really hope you enjoyed it, and as always, thanks for reading!
What did you take away from Orangestreet’s story? Do you have any questions for him? Leave your questions and feedback in the comments below and he may pop by to answer you 🙂