I have a bit of an issue with the idea of ‘net worth’ because when it comes to our retirement calculations, it’s not particularly helpful. Our house is an asset (though MongrelPunt would suggest otherwise), and it will help us FIRE since we don’t have to pay rent. But it isn’t going to actively generate income. Same with our car, our collectables and all of the junk that seems to grow to fill every spare space in our house. Sure, if we sold everything but the car tomorrow, we could live in our car and survive – never working another day in our lives. But that sounds pretty awful. Plus, I’m not selling my Stargate Atlantis collector cards. Not even for FIRE.
In our situation, the physical stuff doesn’t generate an income unless we sell it. So it’s out of the equation. My superannuation doesn’t count either, since my timelines and sums all run to MongrelPunt’s retirement. He’s eleven years older than me, and his job is physically draining, so he will be retiring first. I look at my super as our booster fund – our insurance against insane inflation, illness, financial mistakes and general poor planning.
How do we see if we’re on track for FIRE? To me it’s all about passive income. I’m obsessed with it, and for good reason. MongrelPunt can’t retire at all until our passive income comes to around $350 a week (And I assume a pretty lousy 3% return so our investment base will be fairly large). Of course, I’d keep working, investing or re-investing our passive income while we live off my earned income.
How far along are we? In some ways, we’re not very far at all. As of October 2017, we averaged $37 a week, not counting the frightening fluctuations in my penny stocks.
The upside is, we own our house. It’s not worth a huge amount, because we don’t live in an expensive suburb, but it is fine for us. On top of that, once I go back to work full time, our savings will rocket up, to the tune of over 40k per year. That takes into consideration some household repairs and expenses for our daughter. I make an average wage, as does my partner. Neither of us make six figures, but by living off one income and saving the other, I’m pretty sure we’re better off than most people who do.
I very specifically don’t include my penny stocks because trading is my hobby. We hold a few ETFs, but they are considered a part of our retirement plan. My hobby trading strategy is reckless and it’s a lot of fun for me. MongrelPunt likes hearing about the small companies I support. Before I understood about capital gains tax, I would invest, make a nice profit, then sell off some shares to make back my initial outlay. I then re-invested that sum. I had a lot of fun, but life has been too busy lately to put the groundwork and research in so I’m shelving that for a while.
What will happen to us when the stock market crashes? Very little. The penny stocks were always silly gambles – and the fact that I made back all the money I initially put in has made me extremely comfortable with the idea of losing it. As for the investments that are actually part of our financial plan, I subscribe to the idea that if it all goes belly up, then just ride it out. In fact, I’d probably look at buying into a few companies I’ve had my eye on.
Our passive income comes from the pitiful interest on our emergency account and the dividends we would get from our ETFs if we weren’t reinvesting.
Anyway, here’s our quarterly passive income amount:
|2017 October||$37 per week
$63 to go in 2018
|2018 January||$30 per week
$70 to go in 2018