Am I a F.I.R.E (Financial Independence Retire Early) candidate

Since I started doing some research about being financially independent, I bumped into the F.I.R.E movement. Wikipedia defines F.I.R.E as a lifestyle movement whose goals is financial independence and retire early. The movement shows people leaving their jobs in their 30s,40 and early 50s to pursue their passions. It has gotten a lot of traction around the world.

The FIRE principles says FI(Financial independence) = Annual expenses × 25 years. As soon as you have that figure if you withdraw at a rate of 4% per year, your investment should last you indefinitely i.e. you can live off that amount for a lifetime by withdrawing 4% of the amount a year and adjust by inflation from there on. (Note the 4% rule is based on the fluctuations of your investment in the market, which therefore means you might take less in some years).

FIRE indicates that because you can control your spending , be extremely frugal/economical to be able to increase your savings/investment rate. The maths of FIRE is saying for example if you save 25% of your income for 3 years you work, you replace 1 year of your expenses. And if you save 50% for every 1 and a half year you work, you replace 1 year of your expenses. Your year of retirement will then be based your return on investment in your saving years. Saving this much will require a lot of sacrifice over a long period but there is evidence that it can be done.

There is no doubt that I want the first letters of the acronym Financial Independence, but the retiring early part is something that doesn’t apply to me because I believe if you find your purpose in life the only thing that should stop you from working is your physical or mental inability to work. The second issue for me is I do like nice things e.g. I would like a decent house which might be relative depending on your interpretation of ‘decent’. The other point for me is that while I understand being careful with my spending, I don’t believe in doing it to a point where most of my life is based on being deprived and therefore having limited adventure/leisure. I also wonder if the costs will not increase when a person retires because of all the extra free hours. I also believe trying to save 50/60% of your income after having kids might be a bit tricky.

The other point that became very clear is that not everyone can be part of the FIRE movement because their income is already so low that they are already living frugally because there is no extra money. Which means for the majority of South Africa there is still a need to focus on increasing your income before you can consider whether you’re a FIRE candidate or not. The income focus should not take away from being conscious about your spending so that you always live below your means to be able to increase your savings/investments.

This also requires you to be realistic about your earnings potential in your current role and consider if you need to change careers while also creating a side hustle or a full-on business that is scalable.

There is no doubt that this movement peaked at the right time, with the South African economic growth being so low and technology making some jobs redundant and the possibility of underemployment. It wouldn’t hurt to be proactive and prepare to ensure that you are fine from a finance perspective.

The FIRE principles that I really like are :

1. It changes the way you look at the % of money you need yo save for a comfortable retirement i.e. You move from saving what financial advisers recomment usually 15 to 20% of your income, to realising that your goal should be to save as much as you can.

2. It requires you to start defining your enough so that you know when you are going overboard with your spending for the sake of consumption. Vicki Robin author of “Your Money or your life” also credited with inspiring the FIRE movement said “For every purchase we make we must ask ourselves, is this thing really worth the number of hours I need to invest in paying for it”. Basically saying we must stop mindlessly consumong and propelry define what we want oir money to do for us.

3. It makes you look at time differently i.e. using your working life to buy you time to get what you want at a later stage.

Conclusion

This movement overall encourages conscious living in order to live the life you dream of. When you do the research most of the people who are in this movement end up doing other things and are not completely retired. For me having the option to work when you want to is definitely enough motivation to pursue FI then take mini (6 to 12 months) retirements/sabbaticals every 4 to 8 years.

Shotleft to Premier Resort Sani Pass

I was tired of ‘adulting’ and needed a temporary escape. That’s when I bumped into Premier Resort Sani Pasi in the south of Drankensburg in one of the travelling websites. I didn’t pay for it immediately because it was not part of the plan but as you know big brother entices you with your previous searches. The next thing you know the place starts popping up on your articles. Well I fell for this advertising scheme because I paid for it unplanned.

Packing for this trip was weird because when we checked the weather earlier in the week it was saying 31/32 degrees and when I checked that morning it was saying it averages 25 degrees and because has more mountains I don’t know if the Johannesburg 25 degrees is the same as in Sani Pass. Never the less I finished the packing and I obviously over packed. WIP( Work in progress), I will figure it out at some point. Turns out average of 32 degrees was correct after all and this was excellent for us.

En route, for a full 2 and 1/2 hours before you arrive the scene is just mountains and greenery. The bad thing for us was it was gravel and we were using a small car.

The place is nice, it is a really relaxing place. You are surrounded by nature at its best and it is secluded so silence is guaranteed.

The pool with the mountain as your background

We enjoyed the scenery, went horse riding and got some exercise with hiking and it was awesome.

Horse riding

Hiking or on a walking trail according to their activities list

View from top of the mountain

One of their stunning waterfalls

We also played table tennis, pool and my personal favourite I went back to my childhood and jumped in the trampoline(we called it a jumping Jack, until I found out the real name 3 years ‘lol). There are many more activities.

Things to note

– If you are using a small car, go via Pietermaritzburg to avoid driving in gravel on an average of 30 -60 km speed

– Maybe consider bringing some meat (in a cooler bag, no fridges in the rooms) to give yourself a break from the buffet

– En route ensure that your google map is already on when you enter unfamiliar territory because you will lose network coverage and will therefore not be able to navigate. Unless google map was already on.

I have probably gained 2 kg’s, but what is life without being irresponsible every ones in a while.lol

Nothing beats nature and I believe it will look even better in summer when everything is green.I am feeling well rested and continue to be amazed at the beauty of our country. If you haven’t been put it on your short left list:-).

Has my psyche to money been tripping me up?

I am sure everyone at some point has said I will be responsible or will start saving when I earn enough money. I said it and recently heard my 22 year old cousin say it because he is currently in a learnership and not earning much. The problem though with that thinking is if you don’t develop a healthy relationship with money when you are earning a little it becomes really hard to do the right thing as your earnings increase. As the ‘Parable of Talents’ from the bible(Matthew 25:14 – 30) rightly said it “to those who use well what is given, they will have abundance. But for those who do nothing, even the little they have will be taken away” . There are more of these believes that trip us up, so let’s explore them.

I can’t stick to a budget therefore I am bad with money

We are built different, there are those people who obsess over the details of the budget in a spreadsheet with detailed line items of where which portion of the money goes (I am one of them). And if you are not the above personality and you try to budget , when your groceries are R1,200 and you budgeted R1,000 you automatically think you are not good with budgeting. The truth is the core of budgeting lies in Total Income – Savings/Investment – Fixed Costs (i.e. Costs that don’t change often e.g. Rent) – Variable costs (i.e. costs that change based on inflation of where you buy e.g. Food). So, if you focus on this methodology you don’t have to stress about being R200 over on groceries, you just need to ensure that you adhere to your total variable costs balance at the end of the month. Set yourself up to win by operating based on your personality, the results are the same.

I want to enjoy my life now

The thing about life is you can have everything but you can’t have all of it at the same time. My husband has a cousin who lives by the mantra ‘life is too short so why save‘, so he is always travelling and is very spontaneous. At face value he looks irresponsible but if this makes him happy and he is not a person who thinks buying a decent home or car is important to him, then the only fault in his plan is if something happens to him and everyone around him has to help out because he never thought saving was important (let’s hope he at least has a funeral cover, because that is an expensive event in the black community). While on the other hand if you are the type of person who wants fancy things but can’t afford all of them currently then unfortunately you need to practice delayed gratification to be able to achieve your goals. Think about the tradeoffs between what you want and what you can get while executing for the future.

I am supposed to always help because I am the “financially stable” one in the family or group

Financial enablement is defined as financial help that hurts e.g. Giving money to people who are mishandling money or people who we know they are not going to pay you back. This is a weird one for black people because our culture tells us that we need to always help each other. The truth is if you are feeding a bad behavior, then you are actually hurting not just the recipient but you are also hurting yourself because that money could have been used for other things. Reaching a healthy balance to assist without hurting yourself or reinforcing bad behavior will take time but it is necessary.

How do we unstick ourselves? 

If you realize that you are not where you want to be with money, or you keep tripping yourself up about money. Firstly, be mindful about your personality traits so that you can be aware of what works or doesn’t work for you and then let’s invest in educating ourselves about how to change, then most importantly let’s take action to apply what we learned to be better.

If we need financial independence , we need to face our issues head on. Maya Angelou said it best “Stepping onto a brand-new path is difficult but not more difficult than remaining in a situation which is not nurturing to your whole being”   

5 Lessons from ‘The Lattee Factor’ a book on personal finance

David Bath and co author John David Mann used a parable to tell us about financial wisdom using a person that you can relate to. This was excellent for me because I learn more through stories than points (I then pick up my points from the story). It was a very easy read and one of those books you don’t want to put down until you know where the story ends.

Funny enough even though the book was a personal finance book the lessons were both about finance and life in general which made it extra cool.

Lesson 1: Defined priorities informs what we do with our money
He says the reason we don’t save or save the bare minimum is because we don’t have a compelling enough reason. It’s not about the big house, or new car but it is about what those things bring us that matters. Which means it is more important to decide what matters to you, then ensure that your everyday actions bring us closer to those things. Because if the reason is not compelling enough it becomes difficult to maintain as time goes.

He encourages living rich now, as an example if adventure is what matters to you, ensure you spend is aligned to that and start small to get the encouragement to invest more so that you can experience more adventure.
I find I am more disciplined to save good percentages when my reasons are more compelling, otherwise I save the money but end up spending it on silly things.

Lesson 2: Automate payments (Make it automatic)

This is my most important lesson, he says automate whatever you want to do with your money. i.e. If you want to save for a holiday e.g. to go on holiday to Cape Town, create an automatic monthly debit order to your savings account where you want to save for your holiday. I don’t know about you but while I save I don’t always adhere to my savings goals because something that can most of the time wait comes up and detours my goals. So if I create a debit order like my monthly instalment it will ensure that it happens months. It is even cool now because the banks now allow you to create goals with target amount all your savings accounts. E.g Goal: Cape Town Amount: R8,500 and you save whatever amount you can afford.

So let’s automate our way to living out all our dreams.

Lesson 3: You are richer than you think

Everyone must start where they are at in terms of their income earnings. This starts with changing your habit “from just spending on yourself to paying yourself first”. This is where the ‘Latte factor’ comes in. The ‘Latte Factor’ is a metaphor about how you spend small incremental money on things you could happily do without. In the past year I started a bad habit of not bringing breakfast and lunch from home and opting to buy them. As you can imagine the costs add up, what he is saying is that part of my extra money is wasted by this. So I can opt to only buy coffee and only buy food twice a week. That will save me a good +/-R200 a week which can go towards building my dreams. It doesn’t matter what the amount is, but it is about being more intentional about making sure our money gets us closer to our dreams and we don’t just spend it on things that bring us nothing. This however doesn’t substitute for saving on big things.

He referred to the ‘Paying yourself first concept’ which is not a new concept the first time I read about it in The richest man in Babylon then Rich Dad Poor Dad now here. The concept really makes sense because paying yourself first doesn’t necessarily mean rewarding yourself with an outing after pay day which is part of it but is saying put money away for your short and long term goals in terms of assets building or investing in your growth to be able to create your future slaves. May I always remember this, because when life happens I forget it.

Lesson 4: Buy into products that you are not willing to stop using

This option says If I really like my Mcdonald’s and I don’t want to completely stop buying my Cajun Chicken Meal. I can change my identity and not only be a consumer but also own shares at McD. Meaning when I go buy at McD I enjoy my burger but I also enjoy a cut of everyone else buying a burger at McD as a shareholder through my dividends and capital appreciation. I think this is genius even though it is not always practical because not all the places you like are listed in the stock exchange. But if you are serious you would have to investment in some shares trading knowledge and be patient. Happy learning 😊

Lesson 5: Some writing skills
I also learned some insight into writing, because the main character in this book was an editor at a magazine, they talked a bit about what makes a good article. And that was useful as a new writer. e.g. Not fit too many ideas in an article and developing an idea properly.

Conclusion
Henry a mentor in the book says:” Everyone spends money every day, and as they do they’re building wealth. Everyone builds wealth. The only question is: For whom? “
So let us decide for whom do we want to build wealth for and let our money buy all our dreams.

Questions I asked myself after reading this book:
1. How do I measure wealth, as in what will keep me honest to see if I am on track?
2. What are my values (what matters to me i.e. what do Iwant my money to go towards)?
-Security
– Family
– Adventure
– Making a difference

I did everything “right” why am I still not financially free

Since I started this journey about self-hacking and exploring all my potentially, I have been forced to ask myself some very difficult questions. One of those questions is why I am not ‘Financial Free’, because I genuinely believe I have been doing everything right. I budget, I pay my debts on time and even put in more to pay them quickly, I stay away from unnecessary debt, I paid off my car and didn’t buy a new one for a few years thereafter, I bought a property at a relatively young age, I have decent savings even with ‘black tax’(For those who don’t know black tax is an obligation of black professionals to provide financial support to their extended family) at play, yet I am still not financially free.

That then lead to the question ‘have I really done everything right?’ I honestly thought that was true because the messages about financial freedom are about staying away from debt, having a 3 to 6 months’ worth of salary saved, having an emergency fund, and I did all of that, well everything except 6 months’ worth of savings (Lol). I am also in finance, so I understand money ‘right ‘, so why am I not financially free? I had to dig deep to answer this because I honestly didn’t understand it.

I started by defining what Financial Freedom is to me, it seems I defined it as living debt free with a good credit and having enough savings so that you are not forced to borrow for emergencies. This answer came from analyzing my behavior towards money, I didn’t seat and define it. Clearly this is not a true definition of Financial Freedom, so where did I get this from , I think growing up seeing my mom being the bread winner and trying really hard to ensure we get everything we want, yet struggling at times to finish a month(Disclaimer: It was honestly not bad because she was good most of the time, she just didn’t have a lot of savings). I decided when I grow up I don’t want to struggle with money, I want to be able to pay off my debts and have minimum debt and be able to enjoy life because I saved for it. This therefore informed how I behaved since I started working, I stayed away from unnecessary debt, saved, put out a % towards investments based on what the Financial wizards where saying, yet I am still not rich or free.

I now realise where my flaw/mistake was, I continued with a saving model way after I had passed the saving stage. I continued reading financial material geared at people that are trying to get out of debt or people that are starting to earn a salary and still trying to figure out how to use it efficiently , when I had already passed that stage , and that gave me a sense of I am doing well because I was doing most of the things on the list right, so I was like ‘ Sindi you are pretty smart girl keep it up’. Lol How I was deceiving myself. (As the bible analogy says, I was drinking milk while I was supposed to have transitioned to eating meat) 😊

Since I have this new-found knowledge, I thought I need to redefine my interpretation of ‘Financial Freedom’ and draft a new plan that will align to my Intention. So, my definition is copied from Robert Kiyosaki –Having enough monthly income generated from my assets that fully covers my expenses, normal salary should be considered an extra. So, if this is my definition, what am I going to do differently to ensure that I achieve this:

1. I will take more risks with my money
2. I will intentional seek information that helps me, create wealth not just save
3. Appreciate that not all debt is bad, and capitalize on my profile when it matters
   I don’t know where you are at with your financial life story, but I hope this made you think as to whether you are really winning or is the goal too low that is why you are reaching it. And if your still in the financial infancy phase let your information be geared towards getting the right tools.

Donald Miller said, “In the age of this much information ignorance is a choice, so I am going to seek the information and conquer this. I will keep you posted on my progress. ‘Wink’

Lessons from the book Becoming Michelle Obama

Michelle’s memoir

I really enjoyed this book, I couldn’t put it down. It was real, fun, relatable and compelling. It was also a very easy read.

Lesson 1: Becoming
The first revelation from the book was how we like to ask kids and ourselves “What do you want to be when you grow up?” or “what is your end goal?”, she says that is silly because we behave as if there is only one path that we need to arrive at and that is it. Which is not true hence the name of the book being “Becoming”, because we are always evolving as human beings and we must allow ourselves to evolve if we are present throughout the process so that we know when we are swayed in a direction we don’t like. This hit me hard because I have been chasing a dream that I am not sure I want anymore, but the finisher in me is struggling with letting it go (story for another day).

Lesson 2: Importance of Journaling
It made me want to journal regularly or put my thoughts down so that I can have some perspective with whatever I would have just taken out of my head. I also found it allows me to make more room for more thoughts and a better flow. I was taught about this at a Young Professionals Development Programme I attended with BMF (Black Management Forum) and I understood its value but now I am thoroughly enjoying its value. I am even going as far as to say I want to write a book. ‘Hiding my Face’ 😊.

Lesson 3: Seeking context
I saw how important it is to have context about people. The fact that we come from different backgrounds means how we behave is driven by different things. We must aim to understand and be very slow to judge people. ‘WIP’ for me, I don’t always win with this, yet it frustrates me so much when I am pre-judged. The world will truly be a better place if we seek to understand before we can conclude.

Lesson 4: Being Intentional
I saw the importance of being intentional about achieving the results that I want. The truth is we all know that our actions must match what we want the outcome to be, but we don’t always ensure that they are aligned. Our actions must always show a consistent message and we should never move from that, because our actions expose our truth.

There were many other lessons that I learnt but these particularly stood out for me 😊. If you have not read it, please do.

The Journey Begins

Thanks for joining me!

Good company in a journey makes the way seem shorter. — Izaak Walton