FIRE Community Guest Interview #4 Pursuing FI With Multiple Passive Income Streams in Australia

Well FImily it’s that time of the year for the next installment of the FIRE Community Interview Series!

For anyone new here, this interview series will cover people within the FIRE community who are on their way to becoming financial independent, have already reached financial independence, or who have retired early. If you are reading this and you are financially independent, retired early, or close to reaching these major financial milestones, please reach out to the Modern Fimily!

I am so excited to have Sarah and Laura from Keepin’ It Frugal on to tackle our interview questions this week. We connected with these awesome ladies through our Instagram account and we’re created such an awesome friendship. (And thanks again so much for helping us virtually navigate through our Asian market to find some amazing new food to try out! And for all the pesky little notes I send to you guys about blog hiccups!) Just like Martina from last month’s interview and Ali & Alison’s interview from the month before, it is very rare to find fellow lesbian FIRE members so we immediately hit it off and the friendship has grown ever since.  And yes, this is back-to-back-to-back lesbian FIRE interviews which is pretty incredible if you ask me.  Sarah and Laura live in Adelaide, Australia and are living an incredibly happy life with an amazing work-life balance which allows them to enjoy many hours together spending time on the things they find joy in and value.

I hope you appreciate these responses as much as I do and I hope you gain some knowledge along the way!  If you have any follow up questions or would like to get in touch with these awesome ladies, please leave a comment below or check out their blog. Sarah & Laura, take it away!

1. Can you give us a little background of who you are, what you do, and how you became interested in personal finance? How did you discover the idea of financial independence?

We’re Sarah and Laura! 

We run two businesses – our graphic and web design studio Sarah & Laura Design and our food blog Wandercooks.

We’ve always been interested in personal finance. Both sets of parents taught us to save money and pay for things in cash. We kept a budget when we got together, but I think I got addicted when we kept our budget for our 12 month trip around the world. It was necessary and definitely what helped us to stretch our money as far as we did. 

At Christmas in 2017 I got the book The Barefoot Investor – this was when I went down the personal finance rabbit hole and started teaching myself about investing and financial independence.

2. When in your journey did you realize financial independence was actually possible? Was that the original goal at the beginning?

Our goal has always been to be frugal, save money and pay off our mortgage. We’ve had a few iterations of our future financial plan as we’re forever learning.

It wasn’t until the last year or two that we realised financial independence was possible. We’ve definitely altered our path to now include investing and passive income through blogging.

3. To help put things into context, if you are comfortable sharing some numbers, what is your savings rate, FIRE number, net worth, salary, how many hours a week do you work, etc?  How long have you been working towards financial independence and where are you today? 

Our savings rate is sitting at around 50%. Considering our businesses are only a few years old, we’re so grateful to have bumped it up to this over the last year!

Our FIRE number is $700,000 with the aim to have a passive income of $32,000 annually. Our passive income is just about to tip over $25,000 so we’re making good progress – however most of this is currently from our food blog, so it will be Side-FIRE that we hit first, then overtime, we’ll replace that with investment income. We’ll definitely hit our income goal in the next couple of years, but are still paying off our mortgage – which we hope to clear over the next 5 years. 

Our net worth is currently at $255k and our annual household income is $130k pre-tax. We work 5-8 hours a day from home Mon-Fri.

We’ve only seriously been working towards this over the last year and a half, so we’re super excited for the years ahead and the progress we’ve made so far. 

4. Do you feel deprived?  Do you feel like you are sacrificing and missing out on life?  How would you say your mindset has shifted throughout your FI journey?

I feel it’s been the complete opposite. The more ‘stuff’ removed from our life, the more fulfilled we’ve become. We haven’t just been removing physical things, we’ve also been cutting back on low-value entertainment such as video games and our TV. This has opened up time for high-quality leisure such as socializing with friends, playing guitar, gardening, reading and learning or fixing things around the house for fun.

We were saying since removing these things, our mindset has shifted in a way that almost feels like we’ve woken from a dream. We live more in the now than we ever have before and have time to stop and think – ‘What would I like to do with my time next?’ I think this is very powerful.

5. What do you spend your money on and what don’t you spend your money on? What brings you happiness and joy? How much money do these things cost?

We spend our money on good groceries for cooking, travel – both nationally and internationally and upskilling. They’re probably our biggest three.

We don’t spend our money on a lot of things haha. We don’t buy knick knacks or trinkets, no fast fashion or make-up, and only eat out occasionally – usually for a culturally inspired meal. 

Our joy is found in each other’s company, nature and learning or helping others. Most of the activities are free – some require money like national parks etc.

6. Do you use a budget?  Do you track your expenses? Do you track your net worth? If so, how often do you update these?

We track both personal and business expenses. Our budget makes up the amount we need to pay ourselves from our business and the rest is dedicated to our savings and investments.

I update our net worth monthly and our expenses 1-2 times a month. We’re pretty good with spending, so we hardly need to check our bank for personal purposes.

7. As a FIRE member living in Australia, are there any pros to living in Australia specifically that have helped you along your journey?  Conversely, any cons? What would you say are some differences that you’ve encountered compared to many of the American based FIRE bloggers out there? (I.e. can you explain what a Super and Franking Credits mean to our readers?)

Oh this is a great question.

We do have franking credits here. This means some dividends come with credits for our tax. If a company pre-pays the tax on the dividend, we get a credit for the amount paid. So if a dividend is 100% franked, we’ll receive the credits. This means if we get paid $70 in dividends, we’ll also receive $30 credit on our tax return (assuming a tax bracket of 30%). We think this is a pretty cool bonus!

Superannuation is Australia’s version of a 401(k). Your employer pays 9.5% of your wage into your retirement account which you can elect what company and where and how your money is invested. As we are self-employed, there is no rule to say we have to put away any Super, it’s just a recommendation. 

We were putting away around 8% of our income, but might reduce this slightly to eliminate our debt first. For us, it helps to put some money in Super as they are pre-tax contributions and we only have to pay 15% tax on it. Whatever we deposit, also comes off our total taxable income and reduces the amount of tax to pay. So while it’s worthwhile paying SOME money into it, the downside of Super is the fact it’s almost impossible to touch the funds prior to your preservation age (60+). So if you do want to retire early, you can’t rely on access to this.

For a good and quick explanation of Super vs 401(k) you can read this post on Quora.

8. As an Australian couple pursuing FIRE, what are your post-FIRE thoughts/plans regarding health coverage?  As a reference, what do you currently pay annually or monthly for health related costs? What do you estimate your post-FIRE health costs to be per year?

The Australian health system is a little different to overseas. While we have the public health system, you are expected to purchase private health insurance once you turn 31. If you don’t, you get age loading tacked on (2% a year!) for each year you weren’t paying it. So we both already pay for private health insurance.

Yearly we pay $2300AU as a household. We also have extras cover though for dentist, optical, chiro etc as we calculated we save more with the insurance than if we didn’t and paid cash. 

This won’t change post-FIRE as we’re already paying it. 

You can read more about the Australian Health System here.

9. What is your investment strategy? Do you invest in mutual funds, index funds, dividend growth stocks, real estate, other businesses, etc.?  Has your investment strategy changed over the years?

We started out with blue chip, high dividend companies that have steady growth and ROI based in Australia from a range of areas. We have then simplified and now only purchase Vanguard index funds.

We also invested a small amount of fun money into one of Australia’s biggest equity crowd-funding campaigns for a company called Shebah. It’s like Uber for women, by women, with a focus on safety for both women and children. We really wanted to support this company, and thought we’d dip our toes in this style of investment. They aren’t publicly listed, so the shares are highly illiquid but we’re happy to sit on them and support the company in the meantime.

10. If you could go back in time and change things, what would you have done differently?

I think everything happens for a reason. So I wouldn’t go back, but I will work hard for our future and make sure to always enjoy the now.

11. Has discovering financial independence changed how you view your job and life overall? 

It’s definitely led to changes in the structure between our businesses. Our income was heavily lead by our service-based business but we’re now progressively growing our blogs to move into a more passive-income generating business model.

We’re also more conscious of where we spend our life energy so to speak (thanks to Vicki Robin’s Your Money or Your Life) in regard to our life side of things.

12. Do you take advantage of tax advantaged accounts offered to you?  If so, which ones and how so? Do you have a game plan to be able to withdraw from these funds early without getting hit with a penalty?

As I mentioned, as we’re self-employed we have to pay our own Superannuation (retirement account). It’s taxed at a rate of 15% instead of 30% and we can deposit up to $25k each per year. We’re currently putting in $1000 a month or $12k a year ($6k each). This comes off of our income for the year as well, to keep our bill down come tax time. Double win! Also as mentioned before, the downside is, we can’t access this money early, so we won’t see a dollar until we’re over 60.

13. Where do you see yourself in the next year, 5 years, 10 years?

Next year: At the rate we’re growing, we have a feeling we’ll hit our passive income goal in the next 12 months! Lots of hard but exciting work ahead!

In 5 years: Mortgage paid, on a passive income and travelling multiple times a year abroad. Possibly a little kidlet by then.

In 10 years: Same as above but would love to have a big passion project on the go like a renovation on a heritage house to settle into or something. I also love helping others, so I’d love to be mentoring within the space of women in business or finances. As well as either being awesome parents or aunties! 

14. Have you come out of the FIRE closet yet? Meaning, do your friends, family, co-workers etc. know about your financial independence goals?  If so, how did you bring it up and what were their reactions? If not, why not? Why do you struggle with this conversation and why do you feel that money such a taboo topic?  

Not really. Not into detail with anyone. I think most reactions would think it was humourous or just disbelief. 

It’s definitely not because we don’t want to, I think the few times we’ve tried to talk to people the eyes glaze over, the subject is changed or they simply say “That’s nice”. 

I think sometimes people truly believe it’s not possible, or they’re adverse to change so they don’t want to know about it.

15. What pieces of advice would you suggest to someone who is just starting out or someone who is working toward reaching financial independence? 

Celebrate the little wins. Every dollar counts and starting out with a dollar more than yesterday is progress. Investing the money so that dollar earns another dollar over time is when you know you’re on the right track. 

Also, read The Simple Path To Wealth by JL Collins.

16. What has been your greatest accomplishment to date?

Running 2 businesses while leading the lifestyle we do makes me so grateful every single day. The fact that we started something that is supporting our life, allowing us to travel and purchase a home together still blows my mind. 

17. Are there any books, blogs, or podcasts that you would recommend for our readers to check out?

So many! We actually collated a reading list on our blog with all our favourites. 😁

18. How can people get in contact with you? (if you want to remain anonymous ignore this question) 

You can usually find us on Instagram under @keepin_it_frugal or over on the blog at keepinitfrugal.com

19. Anything else you’d like to share?

Just to say we’ve been blown away by the support and knowledge of the FIRE community we’ve met so far. We feel like we’ve found our spiritual financial home so to speak haha – it’s great to have the space to have these discussions and consider all sorts of new ways to achieve our goals. Thanks for having us!

And we’re now global!  Our first Australian interview in the books!  And the last lesbian couple we have lined up, boo.  While we were on our month long social media hiatus these awesome ladies were in contact with us daily, and we really appreciated that.  We exchanged recipes, pictures, videos, and stories.  Making these connections is what it’s all about.  Here are my key takeaways from this interview:

• They too became interested in personal finance due to a spin off from their passion for travel.  Sound like anyone you know… hint – us! 😉
• They are planning ahead by having MULTIPLE streams of passive income.  Not only are they building up their amazing websites but they are also investing into shares as well. Go check out their food website, Wandercooks, if you want some food recommendations.
• Have you noticed how no one we’ve interviewed feels deprived in any sense?  That’s the beauty of all of this.  You are designing a life that brings you joy and in return you feel all the more content and happy with your environment.  Living in the now is a win win!
• Being business owners means they not only have to keep track of their own finances but their business finances too.  This likely helps keep them organized and on track and in tune with their personal finances.
• They originally started investing in blue-chip high-dividend stocks and have shifted over to index funds.  I wonder how many more index fund converts there are out there who are lured into the simplicity of tracking the overall market.
• Love your advice in question 15! Celebrate the little wins indeed!

• FIRE Community Guest Interview # 1 – Empowerment Through FIRE
• FIRE Community Guest Interview # 2 – We Quit Our Jobs To Retire Early & Travel The World
• FIRE Community Guest Interview # 3 – Dividend Investor Reached FI By Living An Intentional Life

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