Where are we now?

In The Beginning. . .

All stories have to start somewhere, and for us it isn’t in a very good financial position.

At the time of writing, our combined net worth is -$35,804.59, which includes:

Liability Amount
Car Loan  $   18,857.95
Debt Consolidation  $   18,576.74
Interest Free Cards  $   16,369.90
Total Debt  $    53,804.59
Asset  Value 
Car  $   19,000.00
Net worth  $ -34,804.59

I have purposely left out personal items such as clothes, consumer electronics, and white goods.

Plan of Attack: Step 1

For me, planning ahead for anything has always meant defining the best case and worst case scenarios given our current circumstances. I like to do this so I understand the range of possible outcomes, while also allowing for unexpected events that may occur outside of our control.

Given the current situation, it is pretty obvious that anyone would want to pay off the debts in the quickest, most cost effective way. Unfortunately our interest free cards have specific time frames that limit us from leaving them til last, so we are paying them off first before the interest free period lapses. We will then target the debt consolidation loan as it has an interest rate of around 11.45%, and finally the car loan at around 6.4%.

By my calculations we have the best case and worst case scenarios:

  • Debt free by 1st January 2020
  • Debt free by 1st June 2020

The best case scenario would involve changing our current living situation which would reduce our annual expenses by $18,720. This is still up for discussion, and if we do decide to change it won’t be until May 2019

I have also devised the following monthly goals for our combined debt:

Date Target
Aug-18  $  51,187.91
Sep-18  $  48,579.69
Oct-18  $  46,162.89
Nov-18  $  43,691.20
Dec-18  $  41,224.91
Jan-19  $  38,163.84
Feb-19  $  35,107.84
Mar-19  $  32,201.63
Apr-19  $  29,309.64
May-19  $  26,514.79
Jun-19  $  23,775.22
Jul-19  $  21,035.65
Aug-19  $  18,463.05
Sep-19  $  16,126.60
Oct-19  $  13,790.15
Nov-19  $  11,453.70
Dec-19  $    9,738.30
Jan-20  $    7,938.30
Feb-20  $    6,138.30
Mar-20  $    4,338.30
Apr-20  $    2,538.30
May-20  $       738.30
Jun-20  $                 –


Plan of Attack: Step 2

Okay so what next? To become financially independent you need to produce enough passive income to cover your annual expenses. My partner and I would like a very comfortable retirement, including lots of travelling and eating good food. As such I estimate that we would be able to maintain our current lifestyle with around $40,000 per year.

I considered two options:

  • Target of $1 million invested across multiple ETFs producing 5% real growth (nominal growth – inflation) per year, with a 4% withdrawal rate
  • Target of $1.5 million invested across multiple ETFs producing 5% real growth with a withdrawal rate of 3%

My partner and I discussed the above, and though we think we could probably survive with $1 million, but we’d much rather work a few extra years to have a bit more of a safety net. As such we agreed on $1.5 million with a 3% draw.

From my calculations, we should be able to save $45,000 very easily each financial year after 2019, and optimistically up to $65,000. Here is what that looks like in excel.

With $45,000 invested per year:


And with $65,000 invested per year:


*assumptions: 8% annual growth in investments, with 3% inflation

As you can see the extra $20,000 a year makes a huge difference, with a gap of 5 years between each scenario. Given that this is our first rodeo, I am setting our first annual target at $45,000 to be invested over the course of 2020. I will be revisiting this number after 2020 to see exactly how we went, and if we can revise it upwards.

11 thoughts on “Where are we now?

  1. Welcome – and look forward to following your progress. I have about 6 old versions of similar looking tables in old Excel files – I just found the secret is to keep iterating as you refine things along the way.


  2. Good to see you have some interest free debt at least for a while. Pity you can’t do anything about the car and car loan to help reduce debt. Our yearly spending and FI numbers are the same. I’m not against pulling the pin early though to enjoy part time work.


  3. Don’t ignore super. Sacrifice the max you won’t notice it (both the 25k concessional cap and the 1. 6m tax free cap will increase overtime) It’s true you won’t be able to access it until 60 but you won’t need as much when you’re 40. You should be able to significantly adjust your annual investment overtime as your income inflates. Especially if your cost of living remains a small portion of your income. EG since 2009 income up 2.9% inflation 2.2%. You might want a column that adjusts your target cost of living for inflation as the years progress? Will also suggest a good income level needed in 20/40/60 years. I then use a loan calculator to see if my income can support me for the required period.

    Hope my suggestions don’t overstep. Love your work and will follow your progress.


    • Good suggestions, especially regarding super. It is something I will consider once we are debt free (extra contributions that is). At this point in time we are dual income. My income is due to increase substantially in the next 3 years, however we are planning on having children in the next 2. That being said my income in 3 years time will be greater than our combined income currently, so that is at least a great positive.

      I will definitely need to model costs more stringently as time progresses. I haven’t given much time to modelling anything outside of how quickly we can get out of debt in any great detail.

      Thanks for your feedback 🙂


      • Not all debt is bad. I expect to retire with a mortgage. Google “asic super vs mortgage” for a government calculator. Key is the money earned from the investment is higher than the debt. Worst case is you can use super to clear debt if you don’t want the stress. As usual I wouldn’t do super if you think you’ll need access to the money. Pretty happy with a mortgage at 4% if I’m getting 5% after fees & taxes. Our whole fire journey is super at the moment. Can’t see us retiring before 60. Hopefully we’ll get our balance upto the cap(or our target retirement income) so we can start bring the date forward 🙂

        BTW my projection for the super cap in 20 years when we’re 60 is 2.4m each so 4.8m in tax free investment returns.


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