I met Kirsti through my blog. Or should I say that she stalked me on my blog:) Genuine stalkers who like to follow my blog in a non criminal manner are, I should add, always welcome.
It turns out that Kirsti is herself a blogger, successful career woman and also a woman on FIRE (Financial Independence and Retire Early). I have since met her in person, and been awed by her dynamism and commitment to knowing everything there is to know about money and investing. We share a similar vision about the importance of financial literacy, especially for young women. Stay tuned for more in this space – we want to do more to provoke discussion and increase knowledge about the importance of money. It is so much more following ABBA’s lament that wealth for a woman is only possible ‘if I got me a wealthy man’, or ‘win a fortune in a game, my life will never be the same’.
My five-year old son aka Little A is somewhat addicted to singing ABBA songs. You can thank me for the earworm later.
But now, over to Kirsti.
Q: Are you on a Financially Independent, Retire Early path?
We are on the FIRE path with an estimated date of December 1, 2020. We are a blended family of seven, with kids living with us around three-quarters of the time. The age ranges are between 13 and 21 and while they live with us, two are studying/working and we just feed them (although they eat quite a bit!). The three younger girls, 17, and 13 are in secondary school and while they have part-time jobs, they are mostly financially dependent. All three girls have savings accounts that will turn into investment accounts as they turn 18. I’m starting them early so they can enjoy the benefits of compounding.
We can thank the Greek government and the GFC as they kick-started our FIRE journey. David and I were both sick of our jobs at the time, and the Greek Government announced austerity measures to keep the government from going under. These arrangements persisted for some years and around 2014 it struck me – we could also have a year austerity also. Pay down the mortgage, only purchase what we need and be mortgage free. We achieved this goal, paying down the last $130K of debt in a year, assisted by a small inheritance of $30k and this changed the world for us. We no longer had to earn as much money to survive and it gave us options.
Around this time, I created the “death spreadsheet” where I forecasted all of our costs and anticipated income until our respective average life expectancy, and this comprehensively confirmed that we did not need anywhere near the amount of money we were currently to enjoy a happy life.
I began reading Mr Money Moustache and Australian simple living blogs and podcasts like Down to Earth, Slow Your Home and Aussie Firebug and realised we could retire on David’s pension with a top up from investment income by the time he turned 54 years, 11 months. At that stage, I will take a 47/11 (????) and retire also.
We now directly and indirectly invest in shares and have some cash. We have index funds, direct shareholdings and I do a bit of share trading from time to time – only top ASX 200 companies, to preserve capital. We are over half way to our half a million savings goal that will provide passive income to supplement David’s pension until my super kicks in by the time I’m 60. On our calculations, it is possible to live both a frugal and luxurious life AND we can both retire. For our retirement, that means home projects every year, a Tesla when the new model comes out, learning through heaps of short courses and overseas travel. Otherwise, I will grow veggies, raise the chooks and think carefully about consumption.
What are the important money lessons you have learnt through your relationships?
The most important money lesson that I have learnt through our relationship is to have the early confidence to talk about your relationship with money, as both an individual and a couple. In my first marriage, my husband saw himself as the financial decision maker because he earned more money while I cared for children. I hated not being a financial decision maker with a passion.
In my new relationship, I observed my husband’s money habits and I realised that he was generally frugal and sensible – in 2008 he told me his main goal was to pay off his mortgage (then around $350k) and that piqued my interest. I liked the sound of that. And then I observed he owned a vintage Porsche – and I had trouble reconciling this in my mind. How can you claim to have a mortgage goal and own a Porsche? Well – turns out you can. As Paula Pant says – you can afford anything, but you can’t afford everything. David prioritised his love of cars and when he spent money on cars, he derived great pleasure. And it was his hobby – he would order parts and replace them himself. And otherwise, every cent went off the mortgage.
The other relationship saver is that we both have allowances. From our salaries, all money goes into a joint account for expenses, no matter what they are. Fundamentally David and I do not like to compare the costs of my children versus his. We also believe that we can achieve greater financial goals, like FIRE if we work together. So instead, we have allowances – generous – $300 a fortnight – to spend on anything we like. I used to spend mine down to the last cent on clothes, haircuts, bags, girls weekends and makeup but this year I am saving it all in an index fund to create a passive income allowance stream for the future. So far this year with savings and some eBay sales, I have saved $5000.
Finally – even though I am the one in our relationship passionate about finance – we discuss everything. If I can see David’s eyes glazing over I stop (sometimes!!) but I like to make sure he agrees with my decisions around investing and our FIRE goal. It’s critical to have shared financial goals so you can come back to those goals when making individual investment and spending decisions.
Having worked as a family lawyer, what are some of the money issues that you have come across?
Primarily that one person in the relationship takes on the financial management responsibility and the other partner has no clue. Much easier to give up the responsibility and not have it weighing on your mind.
I think the best way to address this information imbalance is for the financially keen partner to agree financial goals with their partner and then create a book, locked up in the safe with the wills and powers of attorney with all of the relevant investment, debt and account details, so if you get hit by a bus, your partner knows where to find them.
Secondly, I have seen a lot of women not caring much about super. Even though it has future financial benefit, some women would rather take cash now and not split the husband’s superannuation for future benefit. This is an issue where women have taken on primary carer responsibilities during the marriage, and consequently have a lower superannuation balance. There is an increase in women living in dire financial circumstances post divorce at later stages in life. I think when you are separating from your partner, the most sensible thing to do is to get both family and law AND financial advice, so you don’t cut short what you could otherwise be entitled to, in the future. Of course – you need to balance immediate needs with future ones – but please, get financial advice at the same time. And change your will straight away.
Do you talk about money with your spouse? If so, how often?
I spoke about this above but seriously – as often as he will let me! Ha! The poor guy……..
Kirsti is a former lawyer, now a public servant and works in supply chain sustainability policies and economic development. With a large blended family and (thankfully!) an overdose of optimism, she lives in Canberra and randomly blogs at Iheartsimpleliving.com where she discusses household sustainability and finances.