He grew up on the poverty line, but now this Australian bloke is flying high!
Growing numbers of Australians are stashing more than half their annual incomes so they can ditch the 9-5 slog and retire early.
The Financial Independence, Retire Early (FIRE) movement uses a combination of extreme saving and passive investing to enjoy a job-free life.
It's not easy; the thrust of the movement is that you need to save at least 50 percent of your earnings — ideally 75 percent — to be able to live the early retirement dream.
One of those Australians who's already reached that goal is a 29-year-old nicknamed 'Captain FI,' who's been blogging about his journey to FIRE at captainfi.com
'After returning to flying from a sabbatical in the last half of 2020, I got some pretty shitty news: my mum's cancer was back, and it wasn't ever going away,' he says. 'I've never cried so much.'
At this moment, he decided to quit his full-time job as a pilot to support his mum as she goes through chemo, having built up an investment portfolio of more than $1.3million after beginning his savings journey in 2009.
'Having an investment portfolio behind me gave me the confidence and security to do this.'
CAPTAIN FI'S JOURNEY TO FIRE
Captain FI began saving in 2009, and one of the reasons he reached FIRE before he turned 30 was because of his passive-income streams — that's money you can earn with minimal effort or maintenance — and by working side-hustles.
For Captian FI, those income streams include a portfolio of websites that generate ad revenue and affiliate income, property investments, matched betting, and flipping items. He also generates passive income through his portfolio of shares, primarily invested in low-cost index funds and exchange-traded funds (ETFs).
While Captain FI invested hundreds of hours in getting his passive income streams going, they're now paying off, and generating more than $70k a year.
'It is an incredible revelation when we discover that our passive income begins to cover certain living expenses; our groceries, our phone bill, automotive costs, or even one of the biggest expenses: our accommodation.'
He also kept his living costs extremely low and saved around 80% of his income, avoiding name-brand clothing, new phones, bottled water, and extended warranties.
'I want to use the money I would have wasted on these things on investing in good quality, low fee, index fund ETFs,' he says.
NO EASY START
Captain FI grew up below the poverty line after his parents divorced, and he says this helped him shape his views on money today.
'Our family was below the poverty line for Australian household income, because my parents divorced – my dad was an addict and abusive towards my mum – and mum had to do it all on her own.'
'It made me appreciate the value of something and how much time it takes to earn that, as well as the importance of looking after your belongings to make them last, and learning how to repair them when they break. It enables me to contently live on a very small budget.'
THE NEXT GOAL: STARTING A FAMILY
Now that Captain FI has achieved his goal of retiring early, he's already planning what's next for his future: 'I want to buy a farm, find a partner and raise as many kids as she will let me,' he told AussieSaves.
And while he's quit the workforce for now, CaptainFI is looking at returning in some capacity next year.
'I'm financially independent as a single bloke, but because I still want to work towards "Family FI" and grow my passive income to support what might be in the future, I'm going to be looking at a part-time job.'
CAPTAIN FI'S ADVICE:
BIGGEST LEARNINGS ON JOURNEY TO FIRE:
– Money is time
– Convenience enslaves you
– You can't beat the index
– Diversify your investments
– Some people will never 'get' financial independence, and you are wasting your time trying to explain it to them.
WHAT YOU CAN DO TO GROW YOUR WEALTH:
– Track your spending
– Live well below your income
– Do not take on any debt unless it's to buy appreciating assets
– Consistently (automatically) invest in a low-cost, broad-market index fund
– Increase your income by up skilling and starting side hustles
FIVE THINGS AUSTRALIANS CAN CUT BACK ON IN THEIR BUDGETS:
– Living in too much house
– Driving too much car
– Financing consumer goods
– Eating out too often
– Paying for convenience, i.e., outsourcing too much
THINGS CAPTAIN FI REFUSES TO BUY:
– New cars
– New phones
– Gym memberships
– Extended warranties
– Unnecessary insurance
– Processed food
– Name-brand clothing
– CDs or DVDs
– Bottled water