FIRE Starters (Financial Independence, Retire Early)

By that reply you seem pretty happy indeed!

 

I love gardening too and feel similar, growing older but hope not crankier.

 

'We didn't need luxury - we needed freedom' says early retiree Dave

NAME: Dave
RETIRED: At 28
INCOME NEEDED: $45,000 a year for Dave and his partner, Alison, and dog, Boss
INVESTMENT STRATEGY: Selling down investment properties and buying more index funds. Currently buying real estate investment trusts. Owns some peer-to-peer investments.

 

I think Dave is a member here.

 

"You might be wondering how we consider ourselves ‘retired’ if our passive income of $25k isn’t more than our household spending of $40k. I explain exactly how it works in this article. Short answer: cash from offloading property."

And yet they are financial slaves hanging on to every last dollar like it's their last.
Although can't find any details on income on his site. Maybe his site is making the money.

He just bought a property in the Illawarra an "unloved beach side suburb..walking distance to the beach...above 800k below 1m"". On 25k income and 42k expenses.
Do they sit on the cash, keep it warm and it grows?
C'mon man, tell the truth.

 

Or they just don't see any value in spending money on **** they don't like or need perhaps?

No he didn't. He lives in Perth, Western Australia. His fellow host of the podcast they produce together bought the house in the Illawarra.

Perhaps a little more reading, a little less judging will promote better understanding.

 

25k income, 42K expenses.
His words, not mine.

My mistake it was the other who bought in Illawarra.
Yet still without numbers it makes no sense. I'll read a bit more...
"use equity in her house, along with our regular savings to buy more property."

So if 56% of equity = 25k. At 4% return that's about 625k in shares at 4%. 833k @3%.
I shares = 56% of equity, then total equity = 1.4-1.5m.
Then the 26% in property equity is around 380-400K. From latest portfolio post.
With 5 IPs that about 80k per IP.

At age 25 (2014) had purchased 7 houses.
"Two in Melbourne, one in Sydney and one in Brisbane."
"eventually, the costs somehow have a way of reaching 35-40% of the rent."

So income was around 120k net - expense 45k = 75k.
How many loans for property can you get at 75k income and 5% deposits?
Afaik it's not easy to get loans unless you put up 20-30% of the price.
That would mean around 100k or more per property in syd & Melb. BNE and Perth maybe a bit less.
So from 2011 to 2014 they bought 7 properties.
75k saved x4 = 300k. Is 300k enough to buy 7 properties?
What about the loans?

First 2 properties were bought at 500k each. At 5% deposit the loans is 950k.

Property #1 sold. 2016
Sale price – $800,000.
Debt owing – $500,000. (same as purchase cost)
Total selling costs – $25,000. (approx. 3% for agent fees, advertising, marketing, conveyancing, bank charges etc.)
Proceeds – $275,000.

Property #2 sold. 2019
Sale price – $875,000.
Debt owing – $500,000. (same as purchase cost)
Total selling costs – $25,000. (approx. 3%)
Proceeds – $350,000.

Currently the ANZ calculator says the borrowing potential 910k.
Very doable at this point.
Then 2013-14 bought another 5 properties. That would seem very difficult.
Unless there's more income or a lot more assets.

Or actually telling the story without it being like a book with half the pages missing.
I thought you FIRE peeps were all into running numbers.

"While anyone can tap away on the keypad, it’s actually really tough to get that **** to make any sense"
Yeah mate. Hard to make sense of fiance without numbers.

 

$25k income specifically from share dividends is my understanding.
$42k expenses includes $20k in rent.

To my way of thinking, spending roughly $22k pa all up outside of housing costs is not a heck of a lot of money. It's pretty minimal. In your view that's being "a slave to every dollar". To my way of thinking it is simply not spending a lot of money on crap they don't want or need.

I've read his blog and never had a problem understanding the numbers. Sure, he rounds the numbers off and doesn't give super specific minutiae detail but it's pretty easy to work out a pretty accurate picture if you want to. Admittedly it could be made up BS and he's retired on the mega millions his fake story on his BS blog brings in but somehow I don't get that impression.

Oh, and between 2012 and 2015 my wife and I bought 7 properties, all with 5% deposits. We earned a little more than Dave but we are both public servants and not on mega high private enterprise incomes. So I don't see that it's all that astonishingly unbelievable.

 

2 parents and 2 kids <5 living on 22k a year? Not very good at all.
I can understand if the goal was to increase the lifestyle and income in the future.
This is just another recipe for disaster.

Lol I doubt he's making million from his site, but not the lack of trying.

First off, well done. I do like seeing people do well. Makes me smile.
"astonishingly unbelievable", lol thems not my words.
My words are "Very difficult" with "Two in Melbourne, one in Sydney and one in Brisbane."
You could buy just outside Bne for around 150-200k in those days.
Though he said he bought the first with 30% deposit (150k). 2nd 5%. So 825k loans.
I've posted here many times about being asset rich/cash poor and like many others here it's always a challenge getting finance. One bank literally told me "You can't say something like you're living on a couple hundreds bucks a week, we'll consider your expenses to be 30k yr."
Yet I was lol. I was doing this "FIRE" stuff in the early 90s. I had good people around me helping out and it still wasn't easy. Or maybe I'm a little slow. But many here also had difficulty getting finance.

"We have a stay-at-home parent" 2021
I thought they were retired? Must read carefully...
"2017. We reached FI and left our fulltime jobs"
latest post "Later, we both shifted to working part-time, and now our roles have reversed."
Maybe not. Sure gave that impression.
And what was that about "really tough to get that **** to make any sense"

Back to my first conclusion, it's just misleading and not truthful.

 

@Piston_Broke

I'm getting lost on your posts, are you picking those quotes from elsewhere, as they weren't in the article linked

Dave's site is Strong Money Australia

 

latest post
Financial Independence With A Family | Strong Money Australia

"We currently earn the equivalent of a little more than one median full-time income and spend around $50K per year"

"We saved up a massive deposit (30%)"

"we could reach FI sooner if my partner and I go back to full-time work"

"My partner was home full-time initially"

And yeah you're right, it's like reading a different blog.

 

The latest post is a guest post from another person.

Perhaps that's what is leading to your confusion. For example, Dave and his partner do not have any human children, only a single fur baby dog.

 

Seems like a lot of hassle just to wind up on an income slightly higher than a couple on the disability pension with a paid off property ($24,770.20 for a single and $37,341.20 for a couple). Almost half their income is currently being swallowed by rent and their future expenses will increase if they ever decide to have kids, which is likely considering he's only 28. He's done well for his age though.

 

Rents will also continually rise.

 

Then you go on to criticise Dave for retiring happily with a modest income

 

No I criticise him for being misleading and not telling the truth.
Anyone can tap away on a blog making themselves look like finance experts.

 

Just to clarify: i liked the second sentence.

 

I think the value in sites like Dave’s is showing that early retirement is possible and give an illustration of what that may look like. There are other blogs that show how people are achieving early retirement with families/children and many other variations.

Like anything, it pays to read between the lines. Questions like what did the particular person start with, are they in a position to go back to work if they want to, (as not everyone can if they resign), family set up, and the list goes on, need to be asked when reading these accounts.

I haven’t read Dave’s site for a while, but when I did was interested in his strategy of gradually selling property to invest in index funds etc.

Some blogs give great details of their investment portfolio and I also find that interesting.

Each person has something to offer and as a reader I gather ideas and apply those that resonate and are applicable to my own situation.

 

I can't speak for Piston_Broke but the issue I have with Dave is that he claims he's retired at 28 but has a household income only slightly above welfare levels. I respect that he's not on welfare but to me he's not much better than somebody living at home with their parents and receiving a disability pension and then claiming that they've "retired". The person living at home with their parents is probably in a better position since they don't have to pay any rent unlike Dave.