The Origin Story

Let’s travel back to August, 2017. I’m a 41 year old guy, with a great job as a software engineer at a company I love. I own two thirds of a house. I also have a wife that’ll be heading off onto maternity leave soon, a nearly-two year old son, and our outgoings each month exceed our income by about $200. I’ve a couple of minor pension investments left in the UK that would be taxed heavily if I ever moved them over to New Zealand, and if things go well my Kiwi saver would only top out about $250k due to my late start - which given inflation would last us about four years of living allowances.

It’s time to start thinking about what happens when I retire. I’m also pretty worried that my mental agility won’t last, and as I close in on 60, my programming chops won’t be what they once were.

The Last Year

Fortunately, by this point I’d been doing a little reading, and come across the Financial Independence / Retire Early (FIRE) community. FIRE was mainly just a bunch of words at this point, but if there was one thing common in the literature it was to dump your spare money into Exchange Traded Funds - a low-cost investment vehicle that allows you to own a little piece of lots of companies rather than a larger piece of a single company. Sharsies had just launched into beta, and it seemed a low risk way to start saving.

I made the decision to start putting $100 a week into ETFs via Sharsies, and then figure out where to find the money.

The money was found by cutting our expenditures. We closed our Audible and Spotify accounts. I reduced my Digital Ocean footprint. We planned our weekly meals in order to bring our grocery shopping down under $200 a week. We sold a car. I didn’t buy any new clothes for the next 12 months. We hand-made most of Christmas presents. Eventually we even sold our house.

There’s a lot to unpack in there, which I’ll do in a future post, but by the end of the first year we’d increased our savings rate and amassed $10k in investments. $10k isn’t going to change the world, but by this point I’d also done a lot reading about FIRE. As a family we’d also done a lot of thinking about what that could mean for us, and what we wanted to achieve.

It’s now August 2018, and following on from some spreadsheeting we’ve got a broad plan to be able to “retire” in 15 years, or when I’m 56. I’ll publish it in the next post so people can see there’s nothing particularly magic about our plans.

When my wife and I talk about our plans to people, reactions range from “that’s impossible”, “that’s a stupid idea”, all the way to “what are you going to do with your time once you’ve retired?”. It's basically these three groups:

Incredulous

Is this really possible? If it is, why isn’t everyone doing it?

Yes - it’s definitely possible. There’s several blog posts I’ve got planned that will go into the detail, but in the most basic implementation the US stock market has averaged 7% annualised returns over the last 70 years. Compound interest means if you just keep sticking savings away, it’s going to grow into a big money-making machine.

If you can get your cost of living down and keep it down then a) you’ve got more income to stick into savings allowing you to get there earlier, and b) you need less money saved to keep going on the lifestyle you’ve established.

It is a privilege to be able to walk this path. There’s lots of “anyone can do this” posts out there, but if you’re working two minimum wage jobs just to meet Auckland rents, someone telling you ‘save 50% of your income’ is going to come off as a disrespectful joke. The techniques apply to everyone, but the ability to really make it fly do require a median or greater income.

Aggressive

That’s a stupid idea!

I really struggle to get my head around this reaction. I can only speculate as to the reasons. My best guess is that people are shocked by someone moving outside of the social norm of earn, consume, repeat - and that the shock translates into aggression. I don’t really know how to answer this? Pursuing financial independence is not for everyone, they are either struggling to simply put food on the table each week, or they love their holiday’s abroad, their new car, and their gadgets just way too much.

Puzzled

If you’re not working, what are you going to do all day?

I actually love my job. I was born to tinker with computers and hang out with fellow geeks while I do it. But… I also love playing guitar, and going on long multi-day hikes, and getting stuck into computer games that you have to play in a long series of eight hour sittings. I love barbecue lunches with friends that turn into late drinks in the garden around an outdoor fire. I’m pretty keen on growing my own fruit and veg. Finally, I’d like the freedom to work on projects that I want to work on, free of the constraints of whether it’s going to be a commercial success.

Honestly, filling my day seems like the easy bit. Deciding how to prioritise the things I want to do seems like it would be the challenge.

Next

Pretty much all the literature around this movement springs forth from the US and to a lesser extent the UK. Which given the populations is not really surprising. In addition, the higher wages and lower cost of living, especially in the States, makes this a much easier proposition. We definitely have challenges here in New Zealand: tax laws are pretty unforgiving around saving and investing, our cost of living is either high or very high, and wages can be less than 50% of what you could take home in other English-speaking countries. But it can be done. The constraints are tougher, but the maths is still valid.

I don’t know how many blog posts I’ve got in me, but I really want to get something out there to share our journey and see if I can add another New Zealand voice to the global community.