Quit Working – Start living.

The Quit Work for Life Manifesto.

Why am I here? Why are you here? I’m here to be financially stable and independent that I can quit my job whenever I want. I want to be in charge of my time, I want to do things that are fulfilling to me. I hope you’re here because you too can see that the future of work is unpredictable and you want more in life than giving 40+ hours a week to someone else for little reward.

Economists once predicted that due to ever increasing labour efficiency our future would be one of increased lesuire hours, less work, more family time and less stress. 

Yeah right. Missed the mark a little bit there economists……

Instead we have long commutes in cramped cities, collections of stuff that weigh us down, job satisfaction that is little comfort as we spend hours away from family only to end up with very little cash after we buy all the supposed trappings of a middle class lifestyle and all the bills are paid.

Don’t despair, there is hope

If you are under 30 and willing to be disciplined there is no reason why you can’t quit work  before 65 (retire early) and spend more quality years doing things that make you and your family happy. The older you are the trickier it gets, but there are gains to be made no matter what decade you decide to get your financial self together.

Panning out how I can quit my job
What are my core ideals and beliefs on the journey to FIRE?

I’ve only been on this early retirement train for a year or so, somedays I feel like I found it too late, other days I am filled with optimism that it won’t be long till I have the financial freedom to leave my job. I have found that I have to change my mindset in order to make progress towards the goal of financial independence and there are a few ideas that I try keep front of mind on this journey.

I recognise that my life is exchanged for cash, 1 hour at a time.

Hours are spent working for cash, it will not be squandered, my time will not be givin in vain. I will not spend my thirties acquiring trinkets and memories of hangovers so that I have to work full time for the next 35 years.

I will have options, I will have cash

I won’t let a lack of savings put me in desperate positions where I am forced to make choices based on a lack of cash. Like having to take a job I find repugnant, make an unethical choice, move my family somewhere unsafe, sell a precious item, go without top medical care etc. Emergency funds will always be available.

I will be smart with what I have.

I will make my money serve me, I will not serve money. I won’t be a slave to a wage forever. My money will be put to work and no dollar shall sit idle. I will do my research and take advice where warranted.

I will always know where I am and where I’m going.

Tracking expenses and keeping a net worth spreadsheet up to date are the housekeeping of financial independence. I shall not slack, I shall not avoid looking at bank statements and expenses.

 

These ideas will steer me towards financial independence. Or at least put me in a better position in my old age, (no cat food dinners for me). Some days it’s hard work, some days its easy, but I know I’m doing something! Better to be living with intent, than to be left wondering where it all went 10 years from now. Sure there will be temptations (omg beer), mistakes (I’m looking at you Forestlands), slip ups but when you know the path you want to be on its hard to stay lost for too long.

 

Investing Failure? Forestlands in the News

When I was young I had issues with credit cards. But I also knew that I should be investing. I was miles away from understanding shares or buying a house but I did stumble across a company offering an investment in pine trees. Forestlands looked like a family run company and you could buy a share in a forest including the land underneath it for $1000. Well I never had $1000. It was not in my capacity at that time to save like that. But Forestlands offered a payment system where you could pay the investment off over 1-2 years. I was instantly sold. Did I do any research into forestry markets? No. Did I read the documentation? Yes but not well. I think I missed a few things. The main thing I missed is that these were B-class shares, meaning no voting rights. That’s never going to be good.

So at the end of March I received a letter informing me that all the Forests have been sold. They couldn’t tell me what my investment was worth and even had a line in the letter advising investors NOT TO CALL and ask because they didn’t know yet. Talk about alarm bells. How can you sell off an asset which has a schedule of investors and their share of the assets and not know how to distribute the funds. Madness.

Forestlands investors left in the dark

So a few investors complained and now the Financial Management Authority is involved and they have got the Serious Fraud Office investigating Forestlands. Apparently there is 18 million in a trust to be distributed to the investors but that doesn’t look like anywhere enough money to even get back what was initially invested. There are rumors that the head of the trust that owns Forestlands actually sold the forests for a lot more and has pocketed almot 19 million dollars in “fees”. We’ll just have to wait and see what the SFO and FMA manage to dig up.

Our Nation Business Review is covering the issue but most articles are behind a paywall so its been hard to keep up with the gossip on the matter but you can see from the pained comments on this article that is affecting quite a few New Zealanders. Forestlands always maintained a folksy family friendly type communications and sent out chocolates with annual updates. It gave them an air of trustworthiness which meant a lot of families felt comfortable buying a few shares for their children as well. Grandparents invested on behalf of granchildren hoping that in the time it took the forest to grow the invest would be worth enough to offset some university fees.

Its hard to keep emotion out of it. My shares in the forest represent about 1% of my total assets. So its a loss I can afford to absorb and move on but you can bet that I feel outraged over the way the Director (Rowan Kearns) has acted.

Mastering Your Credit Card

Credit cards can be a force for evil or a force for good.

One path leads you down the road of mindless overspending and monthly interest charges. The other path leads to points, freebies, reduced fees and increased happiness.

So for years I used my credit cards wrong. Completely wrong. As soon as my paycheck ran out I would put any purchases on the credit card. Leading to a bill at the end of the month. Then I would have to spend most of my next paycheck trying to pay it off, which lead to me being broke and ….you guessed it, putting more purchases on the credit card. Eventually I was thousands of dollars in debt. (That’s a whole other blog post.)

I think credit cards are difficult for a lot of people to manage, the temptation to spend that available credit is high.

So whats the answer? Well as my rich co-worker says “Credit cards are easy, you just pay them every month when the bill comes”

Well DUH.

Is that like the weight loss advice “just eat less….duh”. Uh thanks, I never though of that *eyeroll

For both these problems the answer is simple but in practice not at all easy.

In reality we have to apply some strategies and new ways of thinking to really master the situation

In order to get the most out of your credit card you do actually need to pay it off each month. I suggest that you pay as you go rather than waiting for the surprise bill 30 days later. Every time you make a purchase transfer the amount from your checking account over to your credit card. No money in checking? Then NO PURCHASE FOR YOU. This is a way to start building discipline with credit card spending and never letting yourself get into credit card debt.

These days there are a variety of cards available including no fees, low interest or platinum cards with built in travel insurance (a nice saving if you plan to travel overseas soon). I like platinum cards as I’m a bit of a reward chaser.

Platinum Airpoints Credit Card

However most great points/air miles earning cards have big fat fees. You’ve got to wonder if the fees are going to cancel out any points you might earn. So you do have to do a little math. How much money are you going to funnel through the card and are the rewards worth more than the fee. Credit cards compare NZ does a good job of rounding up all the different types credit cards available in New Zealand and is a good place to start if you are looking for a card.

Haggle those fees, call them up, tell them you are looking at a variety of new credit card options and are their fees negotiable? You don’t know if you don’t ask. If you have other business with the bank like a mortgage or term deposits they may be even more willing to negotiate fees with you. Every fee eats in to the value of the rewards so its important to try and get these as low as possible.

A lot of credit card companies are going to try sign you up for repayment insurance if you’re paying it off as you go then you don’t need this.

Once you feel like you’ve mastered credit card discipline you can start maximizing rewards. Put all your purchases through the credit card (excluding those that charge extra for credit card transactions), groceries, petrol, bills (energy online lets you pay your power bill with a credit card through an app with no extra charges), work expenses that you can claim back, all household spending should go through the card. You’ll be surprised how quickly it all adds up. Keep an eye out for bonus days where purchases can earn you double or triple airpoints. We’ve enjoyed thousands of airpoints over the years just by mindfully spending with the credit card.

Even though we are dedicated to paying our mortgage down early and building our savings we have also enjoyed small holidays around New Zealand thanks to rewards earned on the credit cards. We’ve even used points to purchase a Air New Zealand Koru membership (lounge access, extra baggage allowance) for that extra feeling of luxury while traveling. My feeling is that it’s certainly been worth our while.

 

Income Streams for Last Year (2016)

I’ve ranted about this before. You are not wealthy, you are not rich, you haven’t made it if you are living pay cheque to pay cheque with no savings or investments. MONEY IN THE BANK is what makes you wealthy and only money invested can make you that sweet sweet passive income.

Passive income is what you need to have money independent of a job (so you can stick it to the “man”) and there are lots of ways to generate it. Here’s what I got up to over 2016

Stones of Weath in the flow of a  money stream

Last years (2016) income streams

Peer to Peer Lending $159 (Squirrel) +$75 (Harmoney)
Renting out a room $6500
Dividends $1760
Rental Properties tax refund $5200
Casual work/side hustle income $1067

So the part time work wasn’t passive, obviously I had to trade some of my life force (time and energy) for money. However I only side hustle things I enjoy and things I can learn from so its a win for me. This is work I would quite happily continue if I was retired from my main job. If you can find something you love, that adds value to your life and pays a bit of cash then this is the low barrier way to earn extra income. Other methods like investing require cash up front, side hustles just demand your time. The strain from working so much can take it’s toll so I recommend investing that extra money in income producing assets or paying down debt.

Annnnnnd on to the tax refund, technically that means we made a loss on the rental properties. Ouch. Some of it is a loss on paper only as we had a bit of depreciation this year. Some of it is real loss as the rent doesn’t quite cover the costs of holding (mortgage, repairs and maintenance). I’m still happy with the investments as the properties have increased substantially in value and we should be able to sell one this year and pay down the mortgages on the other properties to the point where we are able to generate actual income.

The renting out a room income comes from a friend of the family staying with us. A youth of 19 years trying to make their way in the big city (well the biggest in NZ anyway). So we have offered a low cost place to stay, all expenses (full board) for only $125 a week. I’m thinking over time we may have to increase that amount so its inline with what they would pay out in the “real” market so that we can encourage them to become self sufficient and manage a budget that reflects the real cost of living in Auckland. We’re just waiting for a little more success on their part with employment. It’s very tough out there for young people just starting out.

Alternative income for 2016 was way higher than 2015 thanks to having a full time boarder. I’m doing my best to invest all that extra income because they will definitely move out at some stage. I’m hoping to add more funds to the P2P lending this year as Squirrel is working out very well with no defaults and an excellent caliber of borrowers. So hopefully 2017 will see another increase in passive income, stay tuned!

Are You Shafting Your Partner on Retirement Savings?

I keep coming across families and couples where one partner is not working. That’s cool, life happens, we’re not obliged to be non stop working machines. They are not working due to disability, other responsibilties to family (like taking care of elderly relatives) or they’ve taken years out of their career to raise young children. For whatever reason your partner is out of the workforce you cannot afford to neglect their retirement accounts.

At the very least you need to work out how you can contribute the $20.06 a week to Kiwisaver to at least get the full $521.43 member tax credit for the non-working partner. This is a guaranteed 50% return on investment and it would be foolish to ignore the chance to collect this.

Lets be honest, in New Zealand its most often woman who undertake the full-time care of children. But regardless of who takes on the responsibility those years not contributing to kiwisaver can really cripple your retirement savings. Looking after a family is unpaid work. Long hours, no financial compensation and sometimes the clients like to vomit all over you.

In New Zealand women live longer than men and need more funds to service their retirement yet so many families are neglecting retirement savings for non working women (not to mention when they are working they are often earning less so even more of a reason to make sure those retirement accounts are contributed to!!)Mothers need retirement savings too

Living off one income is hard but there are lots of ways to find an extra $20 in the budget. You owe it to person giving up their income to care for the family, you owe it to yourself and you owe it to your children. Assuming you are still together when you retire there will be more in the pot for the both of you, more money will mean a less stressful retirement.  You also taking care of your children by saving properly for your retirement, you wont be a burden to them, you wont cripple them financially by having to ask them to pay for any of your expenses in your old age.

 

 

New Zealanders Hate the Sharemarket

These are eight quotes from real people about the sharemarket in New Zealand.

1) Shares are so risky – only invest what you are prepared to lose.

2) Balanced funds are a mix of shares (risk factor applies) and the management fees will cut into the profit margin. Govt bonds or fixed term deposits are cheaper options for many.

3) Basically there is NO perfect investment. In times of low interest rates, such as now, high returns are not possible unless you are prepared to risk losing your money. Shares are never a good investment for those nearing or at retirement.

4) 1987 crash cost me $62000 & the signs are there again, inflated housing prices, greedy banks, for sure I will take my Bank guaranteed interest and cant get wiped out as here(Aus) Banks are Govt backed and guaranteed.

5) The shares I bought years ago in local companies are now practically worthless. I’d like to get rid of them except it would probably cost me more in fees than I’d get back.

6) Over the years I have tried Shares, Managed funds and property but I have found that those managing the money look after themselves first and the investor second and trying to manage tenants is a nightmare. It is the investor who take all the risks. I have lost money on both shares and managed funds while those managing my money have lost nothing, so now stick to term investments with the trading Banks. Although I receive a pittance of a return, at the end of the day I can sleep at night.

7) Stockmarket is being propped up by cheap money, this doesn’t even include the money Japan is printing. The FED is pumping 85 billion a month into the financial system, kiwisaver also pushes peoples retirement funds into the stock market propping it up further. Amercan 401K’s, more stockmarket propping… This is unsustainable… I give it two to three years at most. Massive crash coming.

8) I believe foreign exchange markets are corrupt on a scale that you and I (the average kiwi) could not comprehend. NZ is a tiny blip on the radar screen of huge foreign exchanges that deal in trillions of dollars. It wouldn’t be the first time corrupt trader/s have taken the system to the brink. I would never put a single cent of my money in the stock exchange … EVER

with time we can learn to forgive the sharemarket

The 1987 crash left a huge impression on several generations of New Zealanders. Quote number one was even passed down to me by my parents and I’m barely old enough to remember 1987. I thought the sharemarket was equivalent to gambling!

It was a bad time for a lot of people, retirement savings were wiped out, people had to sell their homes. There is still a lot of deep pain and fear towards “the sharemarket” as if it were an evil entity in itself.

Just today a coworker told me that you should only use money you can afford to lose in the sharemarket. I then pointed out that 90% of her retirement savings is invested in shares via Kiwisaver. New Zealand retirement providers have not done a great job of communicating exactly what their products are to the general public. Even worse she believed those retirement savings were guaranteed by the government.  Oh dear. Kiwisaver providers, please try harder.

Sure, it can be risky if you buy stocks based on a tip from a random Uber driver whose brother just happens to work in finance, but there are ways to invest in a diversified less risky way. There’s no need to risk everything on a handful of stocks. I use index funds to gain exposure to a wide range of companies operating in different markets. Its pretty unlikely that hundreds of companies in different parts of the world will all go bankrupt.

I still hold a handful of single company shares because its fun and exciting but I’m investing in index funds for the foreseeable future. After all, owning shares is just owning a business without the hassle of having to run it.

 

October Dividends and a Hostile Takeover

So all the dividends have finally reached my bank account and anything not set up for automatic dividend re-investment has been combined with some cash in my brokerage account and invested back into the MDZ index fund.

Single Stocks
Michael Hill $48.06
Meridian energy $149.20
Auckland airport $15.16
PGG Wrightson $56.95
Mercury Energy $88.88
Metlife care $8.15
Abano healthcare $24.27

Index funds (Smartshares)
MDZ $135.15
MZY $29.55
DIV $55.00

Total $665.37 (After tax has been paid!)

I love dividends, I love them soo much. It really feels like the only true passive income, I don’t have to do anything as long as the company does well I do well. Passive income is a magical thing and is an essential part of any financial independence or early retirement plan. I finally have money that is making me more money. You can read about how to buy shares and get started investing in the New Zealand share market in my previous post “So you want to buy some shares……”

Total Dividends for 2016 $1037.17

I’m pretty pleased with the dividends this year and its after tax too! Making a grand for doing nothing is a sweet deal. It doesn’t even seem real. It certainly makes up for the mild melancholy that takes over when the market is going into bear mode. I’ve stopped checking my portfolio on my breaks at work, I was obsessing and its better that I just chill and keep to the plan. $500 a month, every month invested into index funds. I’m keeping it simple from now on, no more single stock purchases!

The New Zealand Share market has been on a downward trend for the last few months, but I had one little bright spark. Abano healthcare become the subject of a hostile takeover on Friday afternoon and the share price jumped from $7.60 to $9.00 in less than an hour. It was pretty exciting to watch and word is they are paying $10 a share to try acquire 50.1% of the company. I’m not really sure what that means for a little minor shareholder like me, lets just say no one’s calling me on the phone to try buy my shares just yet, but it was quite a fun afternoon for an amateur investor.

 

The $ide effects of Fasting

I’ve been experimenting with fasting lately. For 2 reasons.

  1. My life is filled with excesses, food, entertainment, luxury, beverages, comfort. Fasting for a day is a good mental exercise in appreciation for all you have and it exercises mental discipline. Even though I’ve felt broke at points in my life I’ve never experienced scarcity of food or true hunger.
  2. I’m overweight and have a family history of type II diabetes. There is research to suggest regular fasting can help improve insulin sensitivity.

    Fasting has FIRE upsides!

    One side effect of regular fasting is the money you save. It’s one whole day a week where you don’t have to buy any food. I also don’t drink any beer or wine. No cooking means less power used in the kitchen. I also don’t particularly feel like being around food so I avoid doing any shopping or being anywhere near shops on my fasting day.

    I like to keep myself distracted from the lust for food so I’m often really productive on my fasting days, but usually in low key activities like doing the accounts, writing or doing a coding tutorial on the internet.

    I’ve noticed too that planning and thinking about meals actually takes a whole lot of mental energy. On fasting days I feel really free because I don’t have the hassle of organising meals.

    When fasting, drink lots of water
    mmmmmmmm Water, or as I call it……Dinner

Fasting may seem a little extreme. I see it as having a bit in common with FIRE philosophies. A little sacrifice for better health is just like saving now for future wealth. I deny myself fancy cars because I know it would be bad for my financial goals and I’ll deny myself dinner once a week because I know its doing wonders for my insulin sensitivity.

Fasting is seen as a bit fringe in my social circle, so is the idea of retiring early. Both ideas are going a little against the norm. I don’t tell my coworkers I’m fasting and I don’t talk about my plans to retire early. It does seem that most of the “retire early” crowd I read about online have really open minds and are keen experimenters. I like to think I’m open to new ideas too, It’s why I didn’t go “Retire early? That’s impossible” when I first read about the concept. So I’ll continue with the weekly fast and the weekly savings, short term sacrifices for long term gains.

What’s it like switching Kiwisaver providers?

Have you ever moved your retirement savings? I recently switched to new kiwisaver provider Simplicity and here’s how it went.

Contemplation

I first started thinking about switching kiwisaver providers when I wrote this post about kiwisaver fees. New Zealanders don’t have many options for super low fee retirement funds. My current provider Kiwiwealth while very open and transparent still charged 1.17% in fees. This is (shockingly) below average. Many providers are charging a lot more than this!

Last month a new kiwisaver provider started showing up in the local newspapers. Simplicity claimed very low fees of 0.31%, they are owned by a charitable trust and a 1/3 of their management fees are donated to charity. Its an easy sell, sounds great on paper. Oh and they mostly use index funds, so nice and diverse.

Simplicity Kiwisaver provider

The Switch

I was intrigued, a low fee fund finally on offer in New Zealand! After reading a bit more information on their website (including the product disclosure statement) I boldly decided to make the switch. Simplicity makes it easy to switch, you have to provide your IRD number and upload some identification (scanned my passport). Painless and after that it’s all in their capable hands. Like all good decisions it was made on a Sunday afternoon. I’d been with Kiwiwealth since I first joined kiwisaver, leaving was hard, for the most part they were pretty good but in the last year my balance had flat-lined. I also learned that they don’t invest in New Zealand shares at all. Which didn’t sit well with me and maybe that’s not very rational, but I like to think we have a few companies here in New Zealand doing exciting things. Show a little faith in your home economy!



 

Patience and Denial

The days dragged on, I paced, I checked my emails constantly. I logged into my old provider most days to see if the balance had been transferred. I got a reassuring email from Simplicity letting me know that yes things are happening but it might take some time, apparently your old provider has 35 days to transfer the funds! That’s working days, so its 7 weeks to get their arses into gear.  Finally on day 13 something actually happened, I was LOCKED OUT of my Kiwiwealth account. Now I know my money is (likely) no longer with them and I’m no longer a client but it seems just a little passive aggressive to delete my login credentials. There wasn’t a “Sorry to see you go email” or even a plea for me to stay. No communication, apparently I’m dead to them now.

What the hell

At lunchtime on working day 15 I got notification from the IRD that they will be forwarding money from my paycheque to Simplicity, yay things are moving along. Meantime no idea where my money is. For 2 days my money has been in the ether, drifting. How do they transfer it anyway? Send a check, money order, bank transfer? Its a mystery.

Resolution

Anyway I got home after work and there was a letter from Kiwiwealth, finally communication! It was a statement of my accounts letting me know how much money would be moving over to Simplicity and that they were sorry to see me go. Thanks guys, I was really hurt when you locked me out. I missed the chance to down load my historical info and how can I geek out on my savings numbers now? Thankfully I had loaded some annual info into a spreadsheet so I can make graphs to my hearts content.

Later in the evening I got an email from Simplicity announcing that my account was active! I logged in and all my cash was there. They did let me know that the deductions from my paycheck were not occurring just yet, but I had the notification from IRD so I know its in the process of being sorted out.

So overall not too painful, 3 weeks of limbo and then bam, all done. Although they legally could take up to 35 days it only took 15, so not super speedy but not terrible either.

 

September Spending

Graph of September Spending

Ah September, I attempted to be more mindful in my spending and reduced the grocery spend considerably. However beer expenses were up up up!

What I do like about looking at the graph is that our expenses after mortgage and savings are roughly a third of total expenditure. So once the house is paid off we’ll be able to really ramp up investing and our retirement expenses probably aren’t going to be as high as we think.

The Good

I managed to save a bit more money this month, I transferred money out of my checking account most days into my savings so I wasn’t tempted to spend it. Grocery expenses were down helped by more careful spending and a $100 voucher I got in exchange for taking part in a nutritional study.

The Bad

Spending money category or I may as well call it, the beer category. I bought a delicious amount of beer. Not only for drinking at home but I also went to my favourite bar’s 3rd birthday celebrations (free food and lots of special brews on tap for the occasion). Then there was my husbands album release party. Yep, my husband is among other things a musician and in his spare time he has been recording this album. He plays all the instruments, sings all the song, writes all the songs, does all the recording and he designed the cover! He doesn’t have a record deal or anything but we threw a a big party for all our friends and gave away loads of CD’s. I spent about $250 on the party. Worth it, it was the best fun we’d had in ages. Other spending money includes Netflix $12.99, Steam $5 and $80 booking a food and craft beer matching evening. I’m starting to think I should break down the spending money category a little further, but I don’t think I want to admit to myself just how much money I spend on beer.

Spending breakdown

The not so bad

Giving – It’s way down, I’ve only donated $174 so far this year, but I usually give more around Christmas. I don’t have an amount in mind that I want to give, its kind of ad hoc at the moment. I would like to be a bit more consistent with my donations.

Household goods – I bought two rugs online, we have hardwood floors and the rugs were on sale. They certainly make the place look more inviting but it was hardly a necessary spend.

Holiday spending – I booked a bus tour of craft breweries North of Auckland. It’s organised by my local craft beer club.

Transport – I used the bus a bit more last month and I had 2 Uber rides (both from events with beer consumption so I wouldn’t have to drive).

So many beer related expenses.