Well, the silly season is over for another year and it brings an opportunity to reflect on habits of the year just past. This post reflects on our spending and saving habits over 2018. I’ve added a quarterly comparison as well.
We averaged $10,280 throughout 2018. This came from a mix of salary, rental income and dividends not reinvested. Total dividends earned in 2018 (including reinvested) were $531.50. A fair way to go in our FI journey!
Over the quarter (October – December), our average income was $14,987. The increase in this quarter was due to tax returns in October.
Throughout 2018, we were aiming for monthly expenses of under $5000. Unfortunately, we didn’t meet this target and our monthly expenses were $5538 – so there’s a bit of fat that can be cut from our expenses. The biggest killer for us is definitely food. Our groceries cost pushed close to $10,000 for the year and our dining out budget cost close to $3000. We’re not the most frugal in this space. This will definitely be an area that we seek to focus on in 2019 – becoming more intentional with our food purchases, meal planning and increasing our vegetarian meals. As we live in a very remote part of Australia, our food costs can be exorbitantly high when we buy locally so making sure that we plan our meals carefully is essential.
A huge category for us in 2018 was travel expenses. We are often on the road travelling long distances to both eastern and southern capitals. Not being intentional with planning these trips meant that we spent close to $7000 on ‘on-the-road’ costs. This included plane flights, accommodation, food and other variables. Eye opening to the say the least! Some of these are unavoidable, but in 2019, we’ll need to look at ways to reduce our travelling costs.
Our vehicle costs were also expensive in 2018 – in part because of the conditions we drive in. We replaced a fuel tank, suspension, and had regular servicing on two 4WDs throughout 2018. One of the vehicles is leased – which means that maintenance and fuel costs are coming out of pre-tax income. This does have its benefits given the distances we drive.
A win for budget tracking in 2018 was the realisation of how much I spent on a mobile plan. I maintained a low plan with a major mobile provider because I needed mobile coverage when in city areas. However, not having mobile coverage where I live meant that this was rarely utilised. We switched to Boost Mobile because it gave me the same coverage, better data and was prepaid. We will see how much this impacts my mobile expenses in 2019.
2018 was our first year of seriously investing outside of super. We had experimented with Acorns in 2017 but branched out into ETFs in 2018. At the end of 2018, our portfolio looked like this. Our strategy involves using cash to offset our mortgage and buying ETFs/LICs in $5000 increments.
Zooming in on our ETF/LIC/Crypto holdings, our breakdown is below. There is no intention to further invest in crypto holdings at this stage. I definitely see a future for cryptocurrencies, but without expert knowledge, I’m not comfortable in throwing more coin at a speculative space that provides no income. There is also no intention to purchase more shares in Telstra. We are aiming for a 50/50 split between Australian and international equities – and a 90/10 split between international and Asia.
The portfolio has had a bit of a slip in the turmoil of the last three months – mainly with VGS and AFI values falling. I took some opportunity of the drop to pick up more VGS. I should have waited an extra week though!
We increased the equity in our IP by $25,000 throughout 2018. We took a loan with a little over 10% deposit and now have close to 20% equity. This puts us a little over three years ahead on our principal payments.
At the start of 2018, our net worth sat at a respectable $109,000 (excluding superannuation). At the end of 2018, we had grown our networth by $51,065. This included paying down our mortgage and investing in a diverse portfolio of ETF/LICs. I think we could have increased this by an addition $10,000 had we been more intentional in sticking to our budget. But still, it’s a fantastic result.
That brings us to 2019 – what adventures will it bring?
It’s our final year in a very remote place – our future moves may see a reduction in income or a move back to dual incomes. We are planning a huge adventure for 2020, which may set our FI plans back, but will give us the opportunity to experience the FI life. We also have some potentially big expenses occurring in 2019, which may impact on our strategy.
Our goals for 2019 are:
- Use YNAB to make more intentional expenses in food, travel and vehicle purchases reducing the expenses in these categories by 25% in 2019.
- Invest $30,000 in ETFs/LICs during 2019.
- Own 25% of our IP by end of 2019.
- Plan, prepare and deliver on a wedding in 2019 and a 12 month sabbatical in 2020.
I’m not sure if we’ll have a chance of achieving all four of these goals – but let’s have a crack, hey?