I’m pleased to welcome one of Monevator’s many silent female readers into the Den this month! Using a pseudonym, Financial Dragon becomes the first woman in our regular series to talk about FIRE. Together with her husband, she’s aiming for a pretty FatFIRE, with homes in London and Australia and the pleasure of seeing an extended family make good use of them.
A place by the FIRE
Hello! Why did you agree to take stock of your financial life today?
Part of my motivation is the stigma around talking about money. Perhaps it’s seen as gloating if you’ve found a path that brings financial security. But I feel sharing failures, successes, and the path might help others.
Also, my story is a bit different as I’m not a ‘still got the first pound I earned’ saver. In fact, money burns a hole in my pocket. Frankly I’ve amazed myself that I have some!
Oh and I’m female, and we do seem to be less commonly found in the comments of Monevator and other Financial Independence (FI) blogs and communities than the blokes.
How old are you?
I’m 45. My partner turns 50 this year. We’ve been together for seven years, married for three.
Do you have any dependents?
I don’t have any of my own kids. My husband has two kids from his first marriage, who are in their late teens – both girls – of whom we have shared custody. Kids typically live at home where we live at least until they have finished further education. So we expect to have the girls for at least another five years.
Whereabouts do you live?
Perth, in Western Australia. I’m originally from the UK and spent time working in Asia.
Perth is one of the most remote cities on earth, in terms of proximity to other major conurbations. Western Australia as a state could comfortably fit France, Spain, Germany, and all the Nordic countries within it. Huge and mainly empty!
It’s cold and rainy in the winter, and hot and dry in the summer – 40-degree days are not unusual. We’ve invested in solar panels for economic and environmental reasons, taking advantage of Perth being the sunniest of the Australian state capitals.
It’s been interesting learning about the differences of managing finances since moving to Australia.
Have you learned anything specifically in terms of a differing investment perspectives?
Property is the big move here from an investment perspective. People with spare capital are heavily tax-incentivised to invest in property.
Most people I know in Australia have an investment property somewhere. Admittedly my circle is professional workers and business owners with decent earnings, but still – very few invest in the markets outside of Super.
When do you consider you achieved Financial Independence and why?
We could stop work and live a ‘lean FI’ life today. But we don’t want to do that, from an intellectual stimulation perspective as much as a financial one.
Also our aim isn’t ‘lean’ FI, in terms of our goals for travel, housing, and so on.
So you’re still working?
Yes, I have a senior role in a financial services organisation.
I’ve always worked in financial services and started this role two and a half years ago. To begin with the job was extremely full-on. However, having now got things in good shape I’m really starting to enjoy it. I’m fortunate to work hybrid currently, with a couple of days a week at home.
I see this as my last ‘big job’. My ambitious nature has tempered a bit as I have got older, and I don’t have the energy left for another big gig.
My husband is keen to stop work soon. His current job is very stressful, and it takes a lot out of him. I’m hoping he pulls the pin early next year. I think he sees this as a chance to take a ‘retirement tester’. I do worry though that he will need to find social meaning and hobbies, as he is a real introvert.
I keep telling my husband, he is expendable at work, but he is not expendable to us at home. I worry about the impact of work on his health, both physically and mentally. His dad passed away young, and my mum has had cancer three times since her 50s, though I’m very lucky that she is still here in her 70s.
These events weigh on us and likely contribute to our FIRE ‘why’ story. Life is precious and short.
Assets: over here, over there
What is your current net worth?
In GBP1: £2.5m.
I track our net worth on The Spreadsheet. Anyone with a basic level of accounting or Excel would be horrified at the jumble of calculations and lack of structure. It works for me though!
I track in both GBP and Aussie Dollars and we hold assets in both currencies. We are exposed to FX fluctuations, but because one of our ideas is to return to the UK to spend some time living and working there, we don’t want to consolidate everything to Australia yet.
What makes up your net worth?
Our net worth includes our home in Australia and the flat I have in London. It takes account of the outstanding mortgages remaining on both properties.
Other assets include:
- Pensions – both UK and Australian for me, invested in global equities trackers and a small fixed income allocation
- A legacy ISA invested in a small cap equities tracker. (I’m not allowed to invest in new ISAs as a non-tax resident of the UK)
- Two individual stocks: the first from my previous organisation, as a portion of my bonus was paid in stock that took several years to vest. The second is a very small amount of Qantas stock, bought as a bit of ‘fun’ in the depths of the first weeks of Covid when my husband said we should buy when it was in the toilet. In fairness it is worth multiples of what we paid, making it my only single stock success story!
- Global 100% equity trackers held in unsheltered brokerage accounts (all Vanguard).
- My husband’s Defined Benefit scheme from his previous public sector job. The existence of this scheme is why we hold few fixed income assets elsewhere. It is in effect a government-backed fixed income asset with no volatility risk. These schemes are vanishingly rare these days, so we’re very lucky to have it.
What’s your plan with the mortgages?
We’re aiming to pay off the mortgage on our house in Perth at the end of this year. We are very focused on being mortgage-free, as we feel this will be psychologically important to helping to ‘give permission’ to dial back on work. We’ll also have more flexibility without a monthly mortgage payment to find.
Do you consider your home an asset, an investment, or something else?
We don’t see our family home as an asset. Most of my more detailed net worth calculations discount it.
We count the London flat as an asset. It’s rented out. We want to keep hold of it so we have a foothold in London that we can potentially live in if we want to spend time in the UK. I also like the idea of our girls or my brothers’ kids being able to experience London with an element of housing cost subsidisation.
Earning: flying high to FIRE
What‘s your job?
I’m in a senior role of a medium-sized financial services organisation. My husband works for an engineering firm, also in a senior management role. I’ve worked in financial services my whole career, starting in London in 2000, mainly in investment and wholesale banking.
I’ve always been in back office type roles, but I benefitted from the generous pay and bonuses on offer in this industry. For instance, it only took five years or so to get into the higher-rate tax bracket.
What’s your annual income?
Between us we earn a total of around £300,000 a year.
How did your career and salary progress over the years?
Even on a decent salary in London, it’s a very expensive place to live. So a big ‘why’ of FI for me was the credit card debt I racked up in my first few ‘party years’ in London.
Buying nice clothes, designer handbags, and rounds of drinks in fancy bars. Going on holiday. Generally being young and foolish! I think at its worst my debt was close to £10,000, which in 2002 was a lot of money for someone earning £20,000 a year. I scared myself with how quickly my debt built up and my calculations of how long it would take to pay off.
I asked for a pay rise, having taken on a new role, and when my then-employer said no, I moved companies. In hindsight that was a good thing, fast-tracking my earnings and skills build.
I consolidated all my debts into a personal loan to help manage them, and paid them all off, helped in part by the company move as well as pushing for multiple promotions. Those brought lump sum bonuses – finally enabling me to save, including for a deposit for a house.
When you read FI blogs, they often talk about the two ways to FI being to either save more or earn more. I took the ‘earn more’ route. I was always looking for roles to build my career and climb the ladder, while avoiding having to be super-frugal.
My parents instilled a strong work ethic in me, and I was always prepared to put in the extra time and go the extra mile so I’d be considered for the next promotion.
Not having kids, I was always on hand to do the next level up full-time job, the work trip, to work weekends and to stay in the office as late as I needed to. And this has probably led to work becoming part of my identity – to a relatively unhealthy level.
I also know though that it will have contributed to my financial stability. Aside from the ability to focus on work and always work full-time, no kids means I’ve not had nursery fees or school fees to cover.
Did you learn anything that you wished you’d known earlier?
Perhaps not so much my own learning, but a broader observation – I am surrounded by many financially successful women, often the higher-earner in their relationship, many of whom have juggled this with raising children.
I’ve reflected that it feels as though my generation of women were told we could ‘have it all’ – the high-flying career, successful relationship, and super-mum status. While many of my friends have ostensibly achieved this, I think some might say it has been at a cost to them in terms of burn-out and mental and physical health. I observe that child and home responsibilities still fall predominantly on their shoulders.
My successful friends have so many ‘tabs open’ in their heads in their attempt to do a fantastic job across every aspect of their lives, I worry there’s no time left for them as people.
Do you have any sources of income besides your main job?
I make some money from dividends on my investments, the majority of which I reinvest. The London flat washes its face but no more.
Did pursuing FIRE get in the way of your career?
No – if anything it drove and continues to drive it.
I discovered the FIRE movement in early 2017. I heard Mr Money Mustache being interviewed on the Tim Ferris Show. It truly was an epiphany. I listened again for a second time as soon as the episode ended.
Looking back, it sounds ridiculous; I give myself credit for having a modicum of intelligence, but “the shockingly simple math to early retirement” eloquently explained by Pete (the blogger behind Mr Money Mustache) really was a shocking revelation to me!
I understand now I am one of the fortunate few who can come to this realisation relatively late in life and yet was able to do something about it quickly, in terms of a financial turnaround.
That said, I feel it’s never too late to have your eyes opened to the power of FIRE. Even if you don’t reach FIRE, or that was never your intention, you will be in a better place for embracing its principles.
Your story has taken you from debt to multiple millions in net worth. Did you have any ‘gulp!’ moments along the way – perhaps as you hit seven-figures?
I think the reason for the ‘one more year’ is that I still remember the debt, and have a lingering fear, despite the numbers on the screen, that I could head back there one day.
I create milestones in my mind for when I will feel ‘financially free’ and then head past them, creating a new goal that it is critical that I meet. A therapist I am sure would have a field day with this!
Saving: better late than never
What’s your annual spending? How has this changed?
I don’t track my spending, but FIRE opened my eyes to the pointlessness of the continued acquisition of stuff.
That had been my default for years – get paid, pop to town to wander round the shops, buy new clothes because I could, repeat monthly.
I won’t say I stopped buying anything after discovering FIRE, but without effort or any feelings of deprivation I drastically reduced my consumerism.
I just didn’t see the point anymore.
Do you stick to a budget or otherwise structure your spending?
The only thing we do from a budget perspective is ‘pay ourselves first’. All the savings, investment, and mortgage payments are covered first. What is left for discretionary spending is limited.
What percentage of your gross income did you save?
From 2017 onwards I went from probably saving around 15% of my income – into pension and mortgage overpayments, with a small amount of cash as an emergency fund – to saving over 50% across cash savings – initially saving for a deposit for the house we now live in – as well as passive ETF investments and increased pension contributions.
What’s the secret to saving more money?
I reckon I’ve spent thousands of hours absorbing content, listening to stories, and digging into the dusty corners of the personal finance internet. It became, for a while, my main hobby.
I believe this rewired my brain to think saving and investing first, not spending.
Do you have any hints about spending less?
Not really. I don’t think I’m that disciplined. Perhaps I have just reached ‘peak stuff’ as I have gotten older and want fewer material possessions.
I’ve also got a lot of stuff from my pre-FI days that I still enjoy.
Do you have any passions, hobbies, or vices that eat up your income?
Travel has always been a passion that I feel justified spending on. My dad in particular always encouraged me to go and see the world. I’ve taken this to heart.
I’ve been much more frugal about how I manage these trips than I would have been pre-FIRE. But I still had the means to enjoy mid-range hotels and decent airlines, and to tick-off bucket list items, like seeing Ankor Wat at sunrise, walking among Komodo Dragons, moped-ing round the temples of Bagan, betting on horse racing at Happy Valley, walking The Great Wall of China, and admiring the blossoms in Kyoto.
I wonder what Financial Dragon sees in sun-drenched, surf-kissed Western Australia?
Investing: no edge as an edge
What kind of investor are you?
Since discovering FIRE I’ve been a passionate advocate for passive investing. I know I have no edge nor any great analytical ability, so I look for cheap trackers and feel fortunate to benefit from any market movements in my favour.
I pound-cost average in the main, and we buy monthly in our joint brokerage account. At the start of my journey I was putting larger lump sums into the market to get invested though.
What was your best investment?
My London flat will probably end up being a good investment, but more from the point of view of not having to roll the dice on the rental market if we go back to the UK for a bit.
We may sell it one day, perhaps to fund building our dream retirement home. But for now it’s just a number on a screen that I deliberately under-value, because I don’t know where the London market will end up.
Did you make any big mistakes on your investing journey?
I’ve never taken any professional advice. I have and will continue to make mistakes, like buying slightly left-field ETFs at the start of my FI journey. But I still feel overall if I keep things fairly plain and vanilla, as I’ve increasingly done, then things will be ok.
Given when we started we were very heavily weighted towards property in our portfolio, I’ve worked to diversify – and to ensure we’re not going to completely beholden to governments moving the goal posts on things like the retirement age for pensions.
Of course the biggest mistake was not finding FIRE or investing when I was 21.
What has been your overall return, as best you can tell?
Because I’ve not been a long-term tracker of our net worth and I don’t really think about returns, I don’t know. I just hope when I sell one day that our ETFs will have at least kept us on a par with inflation. No small ask these days!
I can say our net worth has increased by 70% since I started tracking in 2017.
A nice line graph in my spreadsheet shows our net worth gently tracking up over time. There’s a rollercoaster style dip from Covid in March 2020; this now looks insignificant. It’s nice to have my own personal proof point that you shouldn’t stress about market movements.
How much have you been able to fill your ISA and pension contributions?
Given where I was living when I discovered FIRE and my current country of residence, I’ve not been able to benefit from the tax shelter of ISAs. But I tell myself it’s a nice problem to have to be paying tax when we move to de-accumulation.
We both take full advantage of the tax benefits of Super – Australia’s word for pensions – and max our contributions, and I’m continuing to investigate self-managed Super Funds (SMSFs). These are somewhat similar to SIPPs and enable you to buy investment property.
There is no ISA equivalent in Australia, unfortunately – all the tax breaks are in investment property.
To what extent did tax incentives and shelters influence your strategy?
My strategy is to have control of our future, and not to be at the mercy of changes in, for example, pension or Super access ages. That has a cost, given we cannot invest in the markets in a tax-efficient way as you can in the UK. I feel it’s worth paying to be in control.
How often do you check or tweak your portfolio?
I jump into The Spreadsheet at least a couple of times a week. There are several tabs, and I’m always updating something, whether it’s with the latest value of investments, a new buy, information for my tax return, or tracking spending on a house project.
We’ve not really changed tack for the last couple of years in terms of portfolio planning. Paying off the mortgage and pound cost averaging into the market are the key activities.
Wealth management: death to the mortgages
We know how you made your money, but how did you keep it?
The plan, once I had discovered FI, was to try to get myself into as good a position as possible, as quickly as possible. That initially translated to much more proactively managing spending, cutting unnecessary costs, getting myself invested in the market outside of pensions, and putting my head down at work.
A big focus has been paying off our mortgage ASAP. We built a ‘mortgage pay-off tracker’ so we could predict when we’d hit this goal and to keep focused on it.
Investing contributions will probably pick up when the mortgage is paid off. I’ll also probably shift my attention to paying off the London flat. If we do decide to spend some time in the UK in the future, it would be nice to know we could live there without any monthly payments.
Which is more important, saving or investing, and why?
Investing, even with interest rates on cash looking healthier these days, because of the inflation hedge.
When did you think you’d achieve financial freedom?
I was originally aiming for 2025, but currently its looking more like 2028. I will be 50, and my husband 55, though he might finish work before then.
Has anything unexpected got in your way?
I didn’t expect to find a job in Australia that was similar to my previous roles in terms of seniority. This has helped our FI journey, but probably also contributed to a bit of a hedonic treadmill.
Why are you still growing your pot?
We’re the classic One More Year couple. As I said, we could be lean FI now. But given we want to travel and spend time with loved ones while we can, I’ll probably keep working at least for the next five years on a full-time basis. It would be wonderful if my husband stopped as soon as possible, even if this is more of a mini-retirement or sabbatical, to recharge his batteries and build resilience.
Perhaps when the kids are both independent of us, we might head to the UK for a couple of years and maybe pick up contracting work to pay for our adventures.
Any further financial goals?
The key for me to the whole FI journey is having the comfort to know that if we did need a big pivot – for example if one of us was forced out of work due to health or other issues – we could fall back on the savings we have accumulated. While we would not enjoy the comfortable lifestyle we currently do – or might aspire to in the future – we would be more than able to meet our obligations, keep our current home, and so on.
I know that if something unexpected happens we should be able to roll with the financial punches. This is the ‘gold’ of FI.
What would you say to Monevator readers pursuing financial freedom?
Knowing that freedom could be accessed might be all you need to feel free. You may not need or want to pull the pin when you get there. The American FI bloggers call this having ‘F-You money’…
Any other business?
When did you first start thinking seriously about money and investing?
I’ve always had it in the back of my mind that I needed to get myself to a good place financially. But that FIRE epiphany was in 2017 as mentioned.
Did any particular individuals inspire you?
When I discovered FIRE I went deep. I read every Mr Money Mustache blog post. I followed his links and discovered other bloggers like JL Collins, and books like Millionaire Expat. I found yet more bloggers, like The Mad FIentist, The Escape Artist, Of Dollars and Data, podcasts like Choose FI (US), Financial Autonomy (Australian), and Pete Matthews’ Meaningful Money (UK).
And of course, I found Monevator, as my golden source for all things personal finance, delivered free – though I now happily pay for membership – to my inbox.
Can you recommend your favourite resources for anyone chasing the FIRE dream?
Starting at the beginning with Pete Matthews’ podcasts gives you such a great base level of understanding.
Morgan Housel has such brilliant flashes of insight. I loved his book The Psychology of Money.
Oh, and Excel!
Any advice for any Monevator readers thinking of following you to Australia?
Work out what visa allows you the greatest freedom to pursue your dreams. There are some good ones for shortage skills or non-capital city living. Think about the cost of the visa, the paperwork, and the qualifications you will need to produce and the cost of getting your loved possessions and ones here.
I’m on a partner visa. This cost over £4,000, required the submission of over 70 pieces of documentary evidence of my relationship, and took nearly 18 months to be approved! (Things have got a bit simpler since I arrived though.)
Once here, shop around for a cheap Superannuation (pension) provider. Sign-up, and move that fund around with you from job to job, as you can now do in the UK, to keep all your money in one place.
If you do leave Australia permanently, you can get it back. That’s my understanding.
The Australian Taxation Office (ATO) website is pretty easy to navigate. Read up on topics that are relevant to you. If you have assets in the UK, you’ll need to keep submitting a tax return there as well as for Australia, but the tax you pay in the UK is deductible from what you pay in Australia.
The tax year for Australia runs from July to June. Keep good records to make multiple submissions on different timescales easier.
Finally, it’s very tricky to invest in Australia property if you are not tax resident here. So buying a house ahead of arrival is probably a no go.
Charity and legacy
What is your attitude towards charity and inheritance?
I don’t aspire to leave money to anyone – if that happened it would be a bonus (for them!) I am more interested in gifting what I can in life. For example to help with weddings, house purchases, and so on.
I’ve already gifted a decent amount to my nieces, asking for it to be invested to support the costs of their education. I also want to be there for my parents. I don’t think they will need my financial support, but given the complexities of funding old-age and social care – as expertly articulated in a series of Monevator articles on the topic, which I fully expect to refer to eventually – that may also be required.
As well as always wanting to support charities ad hoc, like those where friends are fundraising, we make regular donations to Give Directly. It is part of a suite of charities recommended by Give Well, an organisation dedicated to evaluating the effectiveness of charities and recommending those with the greatest impact.
Give Directly sends no strings attached cash transfers to some of the poorest people in developing countries. The principle is that cash enables individuals to invest in what they need, rather than relying on aid organisations and donors thousands of miles away to decide for them.
This charity really resonates with me from the perspective of my personal finance journey. I don’t want to be told what I should be doing. I want to feel I have the agency to decide for myself. I’d like to think we will continue to give to this charity, potentially increasing the amount over time.
From an inheritance perspective, I really like the idea of my step-girls or nieces being able to take advantage of our flat in London to experience living in what I continue to consider to be such a fantastically diverse and culturally rich global city, despite our best efforts to hamstring it via Brexit.
I feel happy, whenever I return, to note that stories of its demise do seem to be somewhat over-blown.
What will your finances ideally look like towards the end of your life?
Our finances are complicated somewhat because they cross two countries and currencies. While this gives us the optionality we want, it will certainly be part of my longer-term plan to try to simplify as much as possible. We won’t want to manage complex tax affairs in our 80s. I’m also expecting that by then we will have picked the place we want to be, so we can consolidate to a single currency.
Simplification will likely focus on those investments outside of tax wrappers. I might break my own rules and take some pay-per-hour advice on our drawdown and decumulation strategy. I’m sure there will be some areas where we can optimise that I won’t be aware of, particularly around tax.
When it comes to starting to drawdown our accumulated retirement assets, I can see us taking a couple of mini-retirements where we perhaps take some time off to travel and then pick up work again, before we actually stop working all together.
I’m not ruling out buying an annuity at some point, depending on where rates are. I want to find the sweet spot where we are no longer of a mind (or of sound mind…) to manage complexity, are probably not doing anything flash or that requires large lump sum spending (like travel), and we just need an amount to land every month.
I’ve continued my National Insurance contributions in the UK since leaving, which will mean I will be entitled to the state pension. If it’s still around!
Given there is no inheritance tax in Australia, it makes sense for us to be considered as resident here when we die.
I know life can be unpredictable. All I can hope for is that we and our loved ones are healthy and that we will have the means to make the most of the time we have. Whatever that might be for us.
Thanks Financial Dragon! Of course a £2.5m pot would put many of us well into FIRE territory already. But remember our recent poll showing more than one in five Monevator readers is an additional-rate taxpayer? We’re a broad church, and I’m sure this chat will strike a chord with our many millionaires next door. Questions and reflections welcome, but please remember Financial Dragon is just a reader, sharing her story. Constructive feedback is welcome. Personal attacks will be deleted. See all our FIRE studies.
- British Pounds [↩]
Thank you for sharing your FI journey and Australian adventure @Financial Dragon. It’s an inspiration to those of us back here in dreary Dear Old Blighty! 🙂
Interesting Australia has no equivalent of an ISA and property is so tax advantaged. Along with Canada and New Zealand, Australia seems a quite richly priced property market. Is it the same story in Perth and Western Australia generally, or are there still some pockets of value for money left out there?
Share the sentiments about DB pensions. Mrs TLI and I are just immensely grateful for the luck of having them.
Thanks for the comment @Time like infinity 🙂 I just did some googling to confirm my understanding that Perth is the second cheapest of the State Capitals (if you include Darwin), so there is probably some value to be had here in up and coming suburbs, but its a market at the mercy of the resources industry, so it can be a bit boom and bust… There are lots of rumblings about the impact of, for example, the creakiness of the Chinese construction market on iron ore exports which are BIG business here…
Great to hear you and Mrs TLI also are the fortunate holders of DB schemes – I promise its not why I married my husband 😉
Thanks. Nice article.
I suspect many of us might read it and say you are FI already comfortably because your London flat is really expensive optionality rather than a lifestyle essential but I totally get it and would likely do the same in your circumstances.
FI is really about our own mind over any objective criteria after all.
You are spot on @BBBobbins – and we would definitely consider liquidating if we experienced, for example, a health situation that meant we wanted to fast track our retirement. There is also an emotional part of me that doesn’t want to give up my link to the UK and the ability to return there…
Thanks for sharing 🙂
As you mentioned the book The Psychology of Money is well worth the read – I have twice. I do like his approach to FI in having a large safety net to sleep well at night. He does go into a lot of his thinking on individual investments versus trackers and why trackers tend to win out.
There is a good interview with Morgan on Steven Bartlett’s podcast https://www.youtube.com/@TheDiaryOfACEO
Such an interesting read and well done getting to where you are at !
Did you think not having kids was a major reason that enabled you to get over the line ?
Obviously especially for a woman that decision has huge financial implications-possibly allowing you to take the so called “male “ path to Fire ie no career breaks
As more and more women opt out of having children (50% of women under 30 have no kids in Britain-Guardian figures) perhaps your successful financial scenario will become more common?
xxd09
It was a pleasure reading this article which gave different perspectives not usually heard from. Thank you Financial Dragon.
I lived in Perth for a while. Loved it. Was part of my ‘surf bum’ phase. Tried to see as much of the state as possible, but as you say it’s big, you won’t believe how vastly, hugely, mind bogglingly big it is. I mean you may think it’s a long way down the road to the chemists, but that’s just peanuts to WA.
I think I may be the polar opposite to you but have ended up in a very similar financial position at a very similar age. By that I mean anti consumerism/materialism comes as easily as breathing (baked into the DNA rather than a conclusion reached late in life) and I am systemically incapable of your work ethic/attitude towards a career. I can’t will myself toward prioritising work over other stuff, no matter now hard I try. And here I use work in the very narrow corporate career sense of the word. Bizarrely, I have little difficulty being disciplined and committed and (arguably) successful outside of the career construct. It causes me much chagrin and makes jobs much harder than they should be. This issue is the basis for my interest in financial independence.
I see the kids argument mentioned a lot.
I reached FI at 37 some 10 years ago now. We moved to a cheaper country (France) the kids were 2 and 5 at the time. Caveat: we started on the FI route before the kids arrived 😉
Property in France is much cheaper so we we able to own our property outright. Private education can be had at a fraction of the price of the UK – the state pays the salaries of the teachers. Food is fairly cheap as you can buy direct from producers and winters are milder so less heating. Additional benefit is that holidays are on the doorstep.
So in my experience kids do not necessarily cause a problem for FI if you start early enough and consider a cheaper country……
@contender – France has it all right, a flat hot sea, a windy wavy sea, mountains, food, booze and warmth (in the south). Very smart choice. Did you go in cold, or did you have some connection? Family, language, etc.
Crazy that private school teachers are state paid! What an unusual state of affairs..
Rhino
The other half is French 😉 I worked internationally in many countries so was used to different cultures so the move was fine, loads of Brits down here for a beer and banter with French friends.
Like this post, about Perth, the extra warmth and light does make a lot of difference to us. Everything grows like crazy – free fruit and veg in the summer, solar panels for hot water and leccy, heating with wood – some we harvest from our land. We have an old house that is cool in the summer and no need for air conditioning.
FI has afforded us time to see the kids grow up, time we could not buy back, be able to spend quality time educating them (we home schooled them a bit including a bunch of practical stuff) and having fun as a family.
The private schooling is around 2-3K Euros per year per child – a world away from the UK. Boarding is cheap as well 🙂
Obviously pros and cons of any country – I hear Bulgaria is cheap….. Thailand is very nice but a world away.
France is very expensive (taxes) if you are single and working. Income taxes work on a household level (1 part per adult and .5 part per child – add the parts up and divide your income by the number to work out the taxable band you fall into). Social charges are still payable even if you have no income tax liability of around 17%. You win some things and loose in others.
Good luck on your road to FI!
Very interesting read from someone at the higher end of the wage spectrum. Having one (or in your case two) good salaries like that certainly makes the journey easier I think.
Your story makes me think of my father who despite divorce in his case and never being particularly frugal has still ended up wealthy due to a high income (and db pension!).
At my level which is less than half your joint salary with my wife, something has to give in my experience at least in the journey until wealth has been built.
Certainly not a dig in any way by the way just interesting how people can end up in the same position through two different means: frugality and high income .
Lots of interest here for me as my situation is quite similar. I am also originally from the UK but now living in Perth.
“There is also an emotional part of me that doesn’t want to give up my link to the UK and the ability to return there…”
My situation too. I still have my place in London and agonise over what to do with it. The most sensible thing from a FIRE perspective would be to sell it but like you I cannot face that (yet). A big part of the dilemma is I do not yet know where I will end up living. If I channel everything into superannuation but then return to the UK I will lose the tax sheltering I would benefit from if still an Australian tax resident. If I want to sell the London property it would be worthwhile to become tax resident in the UK and live in it for a while to avoid CGT. I suspect that in the end I am going to get hammered every which way by tax.
Hi Cat,
Who knew Perth was so popular – my auntie and uncle were £10 poms and moved there in the early 70’s
Moving into a BTL doesn’t negate the CGT due for the period it was let, unfortunately.
@xxd09 – I do think the fact I’ve worked full time has significantly contributed to our current financial position and ensured that, unlike so many women, I am not impacted by related factors, such as the pension / super gap for example. I would love to think women will become more personally engaged in their financial security, whether they choose to have kids or not, rather than the more traditional and still quite common patriarchal approach in heterosexual partnerships
@Rhino – I just received a day trip recommendation from the Perth Tourist Board – ‘pop down this weekend to enjoy the valleys of the south west’ it said. Round trip time – 8 hours 🙂 And they are on the doorstep!
An example of how we can never quite be satisfied with our lot – I wish I was less materialistic and less concerned with being engaged in the corporate machine. I wish I didn’t care and could just clock off at 5.01. I wish I could take my own advice to my husband about being utterly expendable at work, as I know I am…. but no!
@contender – I agree there are a lot of ways you can make FI work with kids. I do think it would have been pretty challenging to do that in my London days, so ‘geoarbitrage’ sounds like a good route. I knew folks on ex-pat deals in Asia who were getting housing and schooling covered, and had helpers to provider wraparound care in the home, so that is another way to outsource the cost (and in some instances the upbringing – but that’s a different issue… :))
I agree @Fatbritabroad – higher income certainly means the numbers on the screen tick up more quickly and the ‘smashed avo’ decision is less pivotal. One could argue though that the ‘burnout’ toll of working in two ‘big’ jobs, as well as the time you don’t get to spend with loved ones and doing things you love, means its not the best journey I could take….
@cat793 – hello from down the road!!! Proof that Monevator readers really are a broad and international church!
I’ve been grappling with the same tax issues you mention as well as the emotional aspects of cutting ties.
@Boltt because my flat was my main residence for a period, and not purchased as a buy to let, I do believe I could in theory move back in for a period and get CGT relief of some description, but I’ve not done enough research on this yet, and of course it would depend on valuations etc as to whether that would be the tax tail wagging the life dog….
An interesting read, thank you for sharing.
My understanding is the same as Boltt’s (#13): you will have to pay CGT on your flat for the period for which is it let out.
>I’ve continued my National Insurance contributions in the UK since leaving, which will mean I will be entitled to the state pension. If it’s still around!
It might be worth checking into UK state pensions some more, since I thought if you lived on some countries, such as Canada or Australia, you will never get any increase in your state pension. No idea how this might impact you, but just make you get something for your contributions.
@Financial Dragon – Ah my London days and the joys of child care – you are completely correct kids and child care costs will cripple the majority.
We were fortunate to come across FI via the ERE (Early Retirement Extreme) website before they arrived, so we were well on the way beforehand.
Child care costs were horrific as I remember – the costs involved for the two was more than my take home pay (I was an engineer with a good salary) – so we shared the full parental leave while we could and were better off.
The advantages of saving hard and avoiding debt as soon as you start out in life are massive due to the compounding effect.
As for the children’s education, France is fine however the costs of university education in the UK have gone through the roof and you have to question if they are better off pocketing the money and self accrediting.
Managing between two countries, with the different exchange rates, does vary income somewhat. Tax management needs to be well understood as well as you mention the nuances – good luck navigating the system. We are having “fun” with the system here such as pensions and estate planning – minefield if done incorrectly and too late in life.
Thanks for sharing Financial Dragon, it’s great to hear people’s stories about the FIRE journey. I am in a similar but reversed situation to you – an Aussie in the UK, torn about which country I want to be in. There are great things about both countries, and negative things about both. And flitting between them is expensive and terrible for the climate.
Perth winter is cold and rainy?? I think you have a nostalgic memory of British weather! I know Perth a bit, and weatherspark.com confirms my gut feel – maximum temperature for Perth in mid-winter is only 4 degrees cooler than Bristol in mid-summer, and Perth has 10% higher chance of clear sky (OK, more mm of rain in Perth). You can keep the summer heat in Perth though. A English summer is sublime – the temperature is lovely, everything is green and lush, and the days go on forever.
I have a Super account that I will draw on one day. From what I’ve read its hard to avoid being double taxed on it if you’re UK resident – the Australian government taxed me when I put the money in years ago, and if I remain in the UK the UK government will tax it as pension income when I take it out. I have wondered if I could dodge the latter tax by moving to Australia for long enough to cease being UK tax resident, withdraw the lot from the Super wrapper (which will be tax free after age 60) and then it is just savings, not pension, so no UK tax. But I haven’t yet found a clear statement of how long I’d need to be out of the UK to do this.
You say you can get Super back if you leave Australia permanently but I think that is pretty limited – just for short term workers on specific visas. It does not apply for Australian citizens or permanent residents.
Moving a UK SIPP to Australia seems a lot more favourable tax wise, though I have yet to find any numbers on the cost of a QROPS transfer.
Thanks very much TI for doing these FIRE-side chats, I love reading about the different approaches people take. For future episodes, I’d be keen to hear more about the feelings of being retired early – how people fill their time, find purpose, deal with the loss of status, etc. The getting-to-FI part is pretty similar for everyone (save hard, invest in tracker funds), but after that people take very different paths. Some are bored stupid by retirement and go back to work, others are totally content with just pottering. I’m not at all sure where I will fall on that spectrum.
Really interesting reading thankyou. Timely for me personally too as I am finding myself increasingly considering applying for relocation to my companies Australian business.
We are around 50% of the way to FI, but with young (3 and 1) children, we are considering making a move for a better lifestyle. Post Brexit the EU is obviously a more difficult destination and AUS does represent a good option due to the language and in my case a ready made route to employment.
How have you found the work culture in AUS? Is it similar to the UK?
Kids are indeed the “elephant “ in the room for FIRE
It could be argued that society already has already become much more matriarchal with more women not having kids and therefore enhancing their financial status to the working time equivalent of the male -consequently enabling them to achieve FIRE
Like Contender we had kids while young then lived frugally,saved a lot and only bought a small house-one way of doing FIRE
The less well off and the very rich of course continue to have children-the middle not so much
Hopefully FIRE is then being achieved by this middle group-ie the majority of the population
The long term consequences of no children being produced by the bulk of the population of course is another story
xxd09
@xxd09
Congrats making it to FIRE with kids! The costs do rack up quickly. I have not kept track of how much ours have cost us – worth every penny though.
If proper financial advice (and career and mentoring) was given to the young they would have a much better fighting chance by starting early, avoiding lifestyle creep and socking away as much as possible.
We have ISA’s in the UK for the kids which they review with me to learn about companies and funds (we are allowed to contribute to them but not adult ISA’s). We have started to introduce them to the quirks of finance such as how dangerous some types of purchases and debt can be. Additionally they have both taken a US course on personal finance for teenagers for instance……both really enjoyed it.
We did home school them a bit so they could do some practical courses and I am encouraging them to learn some key professional / soft skills to get a head start in life.
I do believe there are ways to do FIRE and have kids. When you consider having your time back to yourself life and kids can be much cheaper – no work costs, option to live somewhere cheaper, possibly homeschooling a bit so they get a more rounded education with real life skills and holidays outside of term time etc. A good vision and plan to get where you want helps a lot to simulate the living costs and invested capital…..
Very interesting to read – thank you, Financial Dragon! Sounds like you have everything well under control.
As another (quiet-ish) female Monevator reader, I can only say that we have the one life and we have to make choices, regarding family and work, and there is no perfect answer! We had no family support so I stayed home 6 years with our one child. My husband felt the responsibility of being the lone earner keenly, so I responded by being super frugal and keeping expenses very low. Once I returned to work in 2010, we bucked the post-GFC trend in that our income rose substantially, but I couldn’t give up my frugal ways. Started to relax a little in 2016, then found MMM/Monevator in 2017 so doubled down again. We were lean-FI at that point; NW is now 50% higher. I would say my career did suffer, but I wasn’t very ambitious anyway. I retired early-ish pre-summer, husband is still going (although he doesn’t have to!)
Hello Financial Dragon, thank you for sharing your story. I found it interesting that we are of a similar age, both discovered the FIRE community in 2017, and from that point on immersed ourselves in as much of the amazing content as we could and took actionable steps towards freedom.
I made the leap at the end of 2022 and am fast approaching my first full year of FIRE. My own story was featured in the second fire-side chat back in February (domestic geo-arbitrage made it possible).
It sounds like you have been encouraging your husband to consider leaving the workforce sooner rather than later. Is there any part of you that wants to stop working before your current deadline? As I became older and progressed in my career, I was more aware and concerned about the possible invisible long-term negative effects of the stress I felt in my role.
@Jam – you are right – as soon as I start drawing my state pension, if I’m in Aus, there will be no increases, so I will be incentivised to leave it as long as possible. Of course there is always a chance I’ll retire to the UK, which would be a different story – the joy and agony of trying to keep all the options open. Still its not an expensive job to keep up your NI when non-tax resident – few quid a month…
I know @Eadweard – of course you are right about the ambient temperature here, but I am sure I don’t need to remind you how woefully poorly insulated Australian houses are. Mine has the amazing ability in the winter to be 10 degrees colder inside than it is outside.
As I understand it if I draw my UK pension from Aus it will be taxed as normal income here, and the QUROPS options are really limited / expensive from what I understand these days so I am hoping that whole knot is untangled by the time I need it to be! I think thought I’ll probably face your situation in reverse….
@Rosario – the work culture in Aus has been an interesting adjustment for me. I thought it would be super easy – worked with loads of Aussies in London, they drive on the same side of the road and speak the same language etc etc….. But its been a bigger culture shock than I planned for – very rules based, tick every box, governance heavy when I compare to the UK (but not to Asia which is even more so, which helped the transition a bit). There are a number of other ‘culture shocks’ I’ve experienced which veer into the political arena, so I’ll keep them out of these comments, but its been an interesting journey as assimilating to any new culture is.
Hello @Pendle Witch – great to hear from another female reader. The lawyers do the job for us (sadly in the divorce courts!) when they explain to the world that one’s contribution as a stay at home parent is equally meaningful to the family as an earner.
Congratulations on your retirement. How are you finding retirement?
@Jake – I’m not sure about finishing early. Sometimes I wonder if I will ever finish. My dad is still working at 75….. I would like to be I am not sure if my money blueprint has something going on that won’t let me. Like I said – a therapist would probably have a field day, if I was prepared to part with the cash to pay one!
I’ll need to go back and re-read your story now to remind myself of your story. How are you finding life after work?
@Eadweard, I’m in the same position: from Perth to the UK.
I do think Perth feels colder than most of the UK in winter because houses in Perth generally have no central heating. Waking up to 12ºC with no heating (bar the heating light most people have in the bathroom) is really dismal. Sydney is even worse in this respect.
I love Perth and Australia for a visit, but personally wouldn’t choose to move back there. Too much suburban anaesthetic. The UK and mainland Europe is just too interesting in comparison, even with their multitude of problems.
@Ad Astra – Agreed, I’m very glad I went but couldn’t have stayed forever. It’s a very subjective personal opinion, but I prefer the depth and diversity of culture across Europe also.
Probably a bit naughty to post this link but it is really funny on the subject:
https://www.dailymotion.com/video/x2iom1b
The jobs I had out there were great though and the people super friendly. I worked for the Waters & Rivers Commission measuring bore hole water levels in the outback and telling farmers off if they were using too much water. You can imagine how that often went, a whining pom telling an old farmer what they can and can’t do. Great times!
Australian citizen … (worked on MM trading floors in London ALTA)…
@DF, I enjoyed learning about what you didn’t give up on your journey to FI. I’m glad you included the life filled photo on a beach! I spend money too…
And don’t regret it!! I lived in Holland Park – it had a private garden in the square. Metaphorically (literally too), I loved having a key.
I remember my confidence and pride (at 25): brokers paying for Conran restaurants, work events in Mossiman’s Faberge room, midweek sushi seated beside Robbie Williams, Bollinger everywhere. And being surrounded by risk! Learning what to risk, how to, and carry the weight so young. The feeling when a call went right and the trading floor responded!
I avoided firing rounds, scandals and suicide. It had a hard side.
Australia has never felt alive in the same way. We are Conservative and highly patriarchal. It’s easy to save money when you’re not interested in the mainstream.
I changed careers and have once again found myself on the inside with a vantage point few have access to. I think experiences enroute are the prize not just autonomy. All the best for your future.
@FD, divorce not yet on the cards! Since retiring, I’ve been trying to live consciously and lightly. Having spent 30 years in the atmospheric physics/climate science worlds, I see the likely future based on current political and population choices, and am trying to not be too much of a hypocrite. One day I might have grandchildren to answer to.
Good point about poorly insulated Australian houses – I’d forgotten about that. Swedish friends of mine say the coldest they’ve been in their life was a year living in Canberra.
I agree with several posters that UK/Europe is a lot more culturally rich and interesting. For me that’s the major pull to stay in the UK. For natural environment Australia wins. I miss clean rivers and seas, and vast open spaces, and being able to wild camp in the bush in spectacular national parks. Family and old friends are of course also a significant pull to move back to Australia.
Australia is financially richer. Being there last Christmas I was struck by how much more prosperous and confident people seemed than in the UK. I didn’t see a single boarded up shop or person begging in 3 weeks. (thanks largely to fossil fuel money, I know).
Work culture – in Australia I never ventured outside academia, and in the UK I have worked only in a cosmopolitan multinational company. Between those two I have seen little difference in work culture, but those workplaces are clearly not a representative view of either country. My impression is that more generally Australian culture is more blokey, and less tolerant of eccentricity and difference, than the UK. The infamous ‘tall poppy syndrome’. Certainly my wife reports that she feels far more comfortable in UK academia than she did in Australian academia.
Australians have a view of themselves as rule flouting larrikins, and do a great job of exporting this view to the rest of the world (exhibit one: Crocodile Dundee). It wasn’t until I lived outside Australia that I realised Australian culture is actually quite authoritarian and rule following. For example, speed limits are really enforced, and its common to be alcohol breath tested by the police (I’ve been stopped twice in 1 day). So FDs comment about work being governance heavy rings true. However, I never felt that the rules were oppressive or unreasonable. It just seemed like sensible rules consistently applied. On the odd occasions I have to deal with Australian officialdom now its usually a pleasant experience – they are so friendly, and so efficient.
Re Australian tax on UK SIPP, a comprehensive resource I’ve found is https://www.directdocs.com.au/ozsmigrants.html. I have not remotely comprehended all the details in there, but it sounds like Australian taxation on UK SIPP withdrawals is legally quite unclear and if you are not careful you could pay more tax than you need to. Probably worth paying a cross-border tax professional for advice when the time comes.
Thanks for sharing FD, really interesting and inspiring!
So interesting, thank you so much for the history, and story behind the person. Thank you also to Monevator for this series (not that I don’t love the articles too 🙂
Personally, I think Australia is not an easy place to settle into (even for UKites who are closeish culturally to some extent, although less so at certain more fundamental levels). Fully agree with the nanny state mindset. It’s a bit paradoxical, a bit like Priscilla queen of the desert, and yet still extremely conservative values in other respects.. After having lived in UK and France, this is what I struggle most with.
(One Australian I met in France said to me, the only conversation she had with people in Australia was around the value of their house, or what travel they planned to do)
As an Australian who lived in London for many years, and France.. I certainly can attest to the long-term integration challenge (separate to financial challenges).
A few notes (on the financial – the cultural is not easy!)
– For the UK state pension, you can uprate this if you can live in the UK (or EEA) at the time of taking your pension (e.g. moving back for a period..)
– For the UK private pension, if it is DB, then generally moving it is not a great trade. YMMV depending on buyout price, but usually better to leave as is.
– If it is DC, then you can QROPS it to Oz, and yes the directdocs is a great website, I set my SMSF up using their docs (adjusted slightly for my circumstances). Note that you will pay 15% on any growth since becoming AU tax resident to the date of transfer. To avoid this you need to become non-AU tax resident and then return (and transfer within 6m, and then all gains are taxfree). You need to leave the money in the SMSF for 5yrs (assuming you had previously left UK for at least 5y before that). This is a great outcome as it means your growth in was taxfree, your transfer taxfree, and the withdrawal taxfree (post retirement)
– If you can’t meet those circumstances there are other places to access UK pensions at attractive rates (Portugal, France and others – can fill you in if interested)
– Note also the min access age for your pension in the super system is 60yo. Many pensions are accessible from much earlier ages (50 and 55yo are not uncommon) which may be attractive/utilisable if you were non-AU tax resident
– Also, as someone above mentioned, the transfer to the Aus super system is one-way (assuming you are not temporary resident). This is not necessarily a bad thing, as you have full control (like a SIPP) and if after pension age then all gains, growth, income and withdrawals are tax free in aus. Yes you would be taxed if you moved back to UK, but that would just put you in the same position as if you had left it there. Plus it is outside the IHT and any potentially reintroduced LTA
– Housing wise. Yes Australian house prices are crazy. Standard house price to income ratios are 10-12x (i.e. people who earn 200k usually buy 2.4m houses etc). In my view it is essentially where the excess cash goes (because the super system is tax advantaged, and other costs are not much more, yet wages are 2x that of the UK (except for globalised sectors such as IT and finance where they are similarish). So people have more income here than UK. Also if you do buy and go back to the UK, then ensure you do not sell your property while overseas. They remove the Capital gain exemption if you sell while overseas. You can however rent it for 6yrs and maintain your principal place capital gain exemption. This is useful if you end up hopping between the two on a medium term basis (as you can reuse /restart the 6y)
With immigration at multiples (per capita) of the UK (600k this year for a population of 25m), the pressure on housing unlikely to dissipate for a while. (Labour costs very high mean new housing is expensive also, min wage is over $22/hr excluding 11% pension)
It is not possible to hold ISAs while in Australia (at least my UK providers forced me to close them, and they are taxable in oz).
There is no such thing as VCT, or EIS either
You can set up a family trust and bucket company to create a lower average marginal rate, but it is only worth it if you have enough funds outside your super/pension, and either kids >18y and both spouses earning more than about 175k (to move your average tax rate above 30% to make the investment through company at 30% worthwhile)
Some other items I would say are useful
– offset mortgages are a great benefit (you earn an interest rate equivalent to your mortgage rate and can access funds instantly up to your total loan) -> no need for emergency funds if you are able to carefully manage around this.
– I invest in local currency ETFs and stocks (to avoid FX impacts and paying capital gains and other tax due to artificial movements). This is a very complex topic, but with enough assets it becomes sensible to isolate this component to hold the asset allocation constant.
– For those in France, you are /hopefully / eligible for the impatriate regime to avoid trust taxation, and IFI (wealth tax). Further if you live off capital (i.e. drawdowns), these are not CSG/CRDS taxable so you can actually live with quite a low effective tax rate if you are truly FI. (plus the aforementioned very attractive pension route)
Culturally my 2c on things
– I found that I was able to meet some like minded people (in UK, France and returning to Australia as an expat in my own country after many years) after a lot of digging around
– kids after school sports (nippers is a classic one for Australia)
– the local cross-fit and yoga – I worked out that attending at certain times meant you would meet other FI people (i.e. between 9.30am-12.30pm)
Having said that – we are probably likely to head back to France or the UK soon again in full FI mode. (Hence the significant research in both directions also)
Thank you again for sharing your story, and may Perth continue to grow on you. (and at least the UK is only a direct flight away!)