Radical Honesty - Part 2: Our Finances


11 Aug
11Aug


We are 224 days down and only 2776 days to go on our 3000 day journey to financial independence....


As promised in Part 1 of this radical honesty series, today we will dive deeper into our finances so you can get a clearer picture of how much we earn and how much we spend.

In response to Part 1, we received an email from one of our readers asking if it was hard to reveal our identities. To that I basically answered yes and no. Yes, in that there is a certain fear in losing some privacy, revealing our finances and basically "coming out" to the world. No, in that its only money right? Why is money such a taboo discussion topic? Why do we keep it secret? 

In general, I believe humans are secretive about money as we are constantly comparing ourselves to others, even in a subconscious way. How often have you met someone and the first 3 questions are: 

  • what is your name? 
  • what do you do for work? 
  • where do you live? 

In other words how much do you earn? and how do I compare to you? 

It is strange that we think this way. I suppose as humans at some level we are naturally competitive. However I have learnt in life that if you constantly compare yourself to others, you will never be happy with yourself. There will always be someone who earns more, saves more, is better looking, is more charismatic, who has a better car, a nicer house and more money. 


"Comparison Is the Thief of Joy"

Theodore Roosevelt


Comparison will keep you from ever feeling contentment, happiness and joy if used in a negative way. So try and use comparison to your advantage. Instead of resenting someone for earning a large salary or driving a BMW. If that is a goal you have then, instead of feeling negative and resentful, ask yourself these questions:

  • what can learn from them? 
  • how did they get to where they are? 
  • what skills do they have that I can also obtain? 
  • what qualifications do they possess? 
  • what personal traits do they have that I can work on?         

All I am trying to say is that comparison is a natural human reaction, so use it to your advantage. If you are not happy with your life, how much you earn or where you live, then take active steps to make some serious changes in your life to turn the tables in your favour.

So here is your chance to compare with us, however do so in a positive way. We are certainly not earning a massive salary, and my Suzuki Celerio is definitely no BMW. However we are blessed to live a very comfortable life in this beautiful country of ours. We are extremely grateful for all aspects of our life including our finances. 

So without further delay, here are our finances....

Firstly our income....our household income is $8,345.00 per month after tax, plus the occasional performance bonus that I receive (which we generally use for holidays or savings). I work full time in finance and Kylie works part time in administration for a not for profit organisation. From this income we currently have the potential to save between $2,000 and $3,500 per month, depending on what expenses come up in the month.   

Our biggest expense by far is rent, as we are covering the housing for our family and also my in-laws whilst we are in this transition period of building our next house hack (see Part 1 for more on this). 

So here is our monthly income/expense summary:

Income (after tax)
 $8,345.00


Expenses

Rent ($670 per week)
-$2,903.33
Food ($200 per week)
-$866.67
Mobile phones
-$84.95
Internet
-$89.00
Child care
-$442.00
Child sports
-$85.00
Insurances (health, contents, cars)
-$300.00
Car (rego, maintenance etc)
-$183.00
Petrol
-$210.00
Utilities
-$150.00
Miscellaneous
-$200.00


Total Expenses
-$5,513.95


Remaining
$2,831.05


So how do we expect to be financially independent in 3000 days by saving between $2,000 and $3,500 per month? Well that is where our house hack comes in. We hope to have a mortgage of $150,000 or less once we complete the build. Therefore this will reduce our housing costs....well after we use our FI superpowers and pay down the loan in 3 years. Here is our budget for phase 1:

Income (after tax)
 $8,345.00


Expenses

Mortgage (3 year term @ 3.99%)
-$4,415.00
Food ($170 per week)
-$736.67
Mobile phones
-$29.95
Internet
-$50.00
School
-$442.00
Child sports
-$85.00
Insurances (health, contents, cars)
-$300.00
Car (rego, maintenance etc)
-$183.00
Petrol
-$210.00
Utilities
-$150.00
Miscellaneous
-$200.00


Total Expenses
-$6,801.62


Remaining
 $1,543.38


Phase 1 see's our housing costs skyrocket in order to pay down this loan as quickly as we can. We also hope to reduce our food costs by growing our own vegetables and raising chickens and ducks for eggs. We will also aim to reduce our mobile and internet spend by finding more competitive deals on both. 

After the mortgage has been paid off, our savings will go into overdrive. Here is phase 2 of our plan:  

Income (after tax)
 $8,345.00


Expenses

Mortgage
 $ 0.00
Food ($170 per week)
-$736.67
Mobile phones
-$29.95
Internet
-$50.00
School
-$442.00
Child sports
-$85.00
Insurances (health, contents, cars)
-$300.00
Car (rego, maintenance etc)
-$183.00
Petrol
-$210.00
Utilities
-$150.00
Miscellaneous
-$200.00


Total Expenses
-$2,386.62


Remaining
 $ 5,958.38

 

At this point we will be saving over 70% of our net income, getting our annual expenses down to around $30,000. This will give us the power to design our life the way we want it. We may choose to work part time, start a business, change careers, travel for a while or we may find renewed passion in our current jobs and continue to save and invest. Who knows? But the great thing is that we will be in control of our destiny, our finances won't control us. 

So there you have it, all of our financial secrets laid bare for all to see. We have nothing to hide now. 

Now back to my points on comparison, I am sure some of you earn more than us and some of you less. If you earn more, than good on you...keep up the great work and focus on maximising your savings and achieving your goals. 

If you earn less, then the same principles apply....keep up the great work and focus on maximising your savings and achieving your goals. If one of those goals is to earn more, then work on ways to achieve this by upskilling, reskilling, starting a side hustle, taking on more work, by seeking a promotion at your current job or even by becoming an Uber driver.

Only you have the power to make the positive changes necessary to achieve your goals. So start today!!     


Cheers, Jason (Mr 3000)


Thank you to our readers, our blog has been featured at #8 in Top 10 Australian Retirement blog list.


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View our next post:

https://www.3000days.com.au/blog/our-investment-strategy-are-we-wrong-or-just-early

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