November Update

Hi again, and welcome to the November update! Finally this month our expenses have normalised, with nothing untoward popping up. This is the second month under the new debt structure, so if you missed what changes were made in October, best check out that update post before continuing here.

Something interesting happened again this month. We had a major fault with an expensive item that we purchased, and pursued a refund with the retailer. After much haggling back and forth they finally gave us our money back. Old us would have rejoiced at the sum of cash flowing back to us and likely would have blown it on some unnecessary item. New us assessed what utility we would get from spending the full amount and ended up purchasing something that cost just 16.39% of the original item, while still providing us with the same utility. I love new us, we kick butt!

As a result, a portion of the refund was paid onto our consolidation loan. This puts us about 5 weeks ahead of our last forecast of being debt free by the end of November 2019, bringing us forward to around the third week in September depending on interest charges. Now lets get to my favourite part, the numbers!

Forecast Nov
Consolidation Loan  $ 23,812.52
Credit Card A  $ 0
Credit Card B  $ 5,678.47
Credit Card C  $ 5,700.16
Total  $ 35,191.65

 

Actual Nov
Consolidation Loan  $ 20,231.25
Credit Card A  $ 0
Credit Card B  $ 5,678.09
Credit Card C  $ 5,700.00
Total  $ 31,609.34

As you can see we are ahead of our revised forecast by $3,582.31 and $12,081.86 (also represented in the graph below) of our original forecast prior to restructuring our debt. A very pleasing result indeed! From hereon out I don’t foresee any other large inflows so it should be pretty slow and steady sailing toward September 2019.

Tracking

Mrs Path to Fire and I have been discussing her recent increase in income, and have agreed that from January onward, she will be contributing an extra $300 a month toward our debt repayments. Plugging this into our Excel spreadsheet reveals that in the worst case scenario we should be debt free by the second week of August 2019. This is a very exciting prospect, that in only 9 months time we can be debt free. I would never have thought this possible when starting back in July this year with $53,804.59 of consumer debt. Additionally, some readers have asked what our ‘savings rate’ would be given how much of our net income we use for debt repayments. I am happy to report that we are currently allocating ~45%.

This gives me great hope for our investment goals in the future, as we continue to minimise our expenses into the new year. A few expenses that come to mind are our transport costs, which will decrease by $3,120 in 2019 due to me receiving a company car, and also our internet and phone costs, which I believe I can bring down by about $1,200 a year (we are currently paying an eye watering $270 a month for 2x phone plans and home internet, I can’t wait to come off contract…). Once we are debt free, I will be applying for a credit account with two cards so I can track our combined expenses more accurately, and also begin utilising sign up offers and redemption of frequent flyer points. I am approaching this idea with caution given our historical tendency to over spend, but I think the plan has merits as long as we remain disciplined.

One thing I have been asked to include in previous posts was our net worth. Up until this point I have purposefully left out my HECS debt and our Superannuation balances from our update posts, however I think they should be worthy inclusions. Though we plan on retiring much earlier than the government will allow us to access our Superannuation funds, I still think it is worth tracking.

As at the end of November 2019, our current net worth is $25,139.95. Our combined Superannuation balances are $83,655.59. Like I said, Superannuation has been ignored as part of our FIRE calculations, but it is nice to know that an additional pool of money will come our way once we reach preservation age, currently 60 years young for my generation…

For those interested the pie graph below shows the current splits between consumer debt, HECS debt, and our combined Superannuation balances:

Networth

Thanks for reading, and I hope you and your family have a safe and happy Christmas. Let me know what else you’d like to see in future updates in the comments below.

5 thoughts on “November Update

  1. Nice work, you are doing well.
    If I have any issue with a product I usually just mention ACCC to them and get a resolution fairly fast.
    One question, why did you pay the bonus amount off your consolidated loan instead of one of your credit cards?
    Isn’t the credit card interest rate higher? also, you get the psychological benefit or snowballing your lowest debt first?

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    • Yeah it was funny, the Area Manager tried to tell me I wasn’t entitled to a refund, even after referencing the ACCC and consumer guarantees. In the end I wrote in to their head office and I think they gave him the shoulder tap.

      Good question regarding the bonus amount. The interest rate on the consolidation loan is 10.90%. Both credit cards are 0% balance transfer rates. So ultimately this will save us more money on interest. I have read of the psychological benefits of the snowball approach, however I think that this blog and the tracking of each month toward a goal gives the same benefit. From my calculations we should have the consolidation loan paid in full by the 2nd week of June 2019. The interest free periods lapse in November 2019 and May 2020, so we have ample time to pay them off before incurring any additional cost.

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  2. Pingback: December Update | Follow us on the path to FIRE

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