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.

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