7 Elegant Steps to Financial Self Reliance

Simple Money

So, without any fancy preamble, here are the 7 seven steps:

1. Open a low-fee reputable brokerage account.
2. Skim 20% off every dollar that comes your way (no exceptions) and send it  to your brokerage account
3. Wait till you have $1000 saved in your brokerage account
4. Buy a single low-fee indexed all-world fund
5. Repeat steps 2, 3 & 4 mindlessly (ideally, automate these steps)
6. Get on with really enjoying life with the remaining 80% of your income.
7. When 4% of your brokerage portfolio’s worth equals your base yearly expenses, then you are 100% financially self-reliant

NB: This post is not financial advice.

I am not a financial adviser nor do I have any finance advice qualifications.
Please do your own thorough research and/or consult a trustworthy independent financial advisor

Oh, by the way – step 6 is the most important one.

Take care and stay nice!

Phil

Places I Visit

Simple Home, Simple Money

With hardly any meaningful travel happening in the current environment, I thought I would share some of my favourite places to visit on the interwebs. The persistent voice in my head to live more peacefully and simply coupled with a determination to ensure that we are putting away for our future lives is validated by some very authentic writers – writers who are living what they are writing (click on the bold links). I’ve also sprinkled some pictures of things and food from our house through this post too – just because.

A thoroughly thoughtful and authentic blog is that of g. Donna’s Generations Before Us. These writings show how a simple life just does not happen by accident, but rather requires persistent and mindful actions.

I often think about the future and am determined to ensure that we can provide for ourselves in times to come and build an alternative income. A Western Australian, Dave, generously shares his journey and research on how everyone can achieve a slow and steady way to replace their income for the future. You’ll find Dave’s writings at Strong Money Australia. Dave practices what he preaches and is humble and realistic in his approach.

The very first site I ever stumbled across in the early moments of my search for living a simpler life was Rhonda Hetzel’s writings. You’ll find many years of Rhonda’s journalling at her blog Down To Earth. Even if Rhonda never writes another word, her blog is a massive encyclopedia of practical, wise, realistic, no-nonsense advice that I quietly wander through – often daily. The archived posts are vast.

A British writer helping English folk (and the rest of us too) shifting paradigms about debt, investing, work, goals and approaches to living purposefully is The Escape Artist. The big hitting realisation for me was that I was in a cyclic prison of work/eat/sleep/repeat/die. This site deals with this very thoroughly.

If you ever thought that you could not possibly live simply, frugally and meaningfully, growing your own food and embracing the concept of ‘home’ due to some hardship or block, then Out Back Tania’s writing will leave you without an excuse. Tania lives on the edge of a dry harsh desert yet achieves abundance in astounding ways. I am a quiet devotee of Tania’s journal. It silences my excuses at every read.

We have 5 daughters, thus the topic of women being self-reliant and resourceful is a topic close to my heart. Burning Desire For FIRE is a real life, no-holes-barred account of one Australian who raised her small boys alone, dug herself out of debt and has set up wisely for a secure future. It is a humbling and authentic read.

There are no end of fabulous writers out there who are generously sharing their real human stories with no snake oil motives or idealistic tinting. These quality writers above are rare gems hidden among an avalanche of pretentious fake gurus out there.

Enjoy exploring the many years of writings these good people have shared for all to benefit from. There a more excellent authentic writers that I’ll share with you some other time too.

Take care folks and stay nice.

Phil

Getting Your Laundry Whites White

Simple Home

WHEN your laundry whites start to take on a slightly grey tinge, the following easy DIY recipe will get them back to a beautiful white again.

Schools that deem white socks and shirts to be sensible wear for children used to drive me nuts as getting these items white was always expensive and time consuming until I experimented and started using this simple frugal recipe.

Consumerism just loves the laundry whitening regime and sells so many products especially pitched at promising to turn your whites into a blinding Disney version of white linen complete with that self-emitting blinding spray of ice-blue sparkles as it moves in the ever-present romantic breeze  – whatever!

The following recipe is simple, cheap and super effective.

DIY Laundry Whitening Recipe

This should only be used on garments and items that are whites only – any coloured piping or motifs will not always do so well over time, so ensure your laundry load is just whites only.

1/3 cup of cheap dish-washing liquid
1/3 cup Borax
1/3 cup of bleach (liquid or powder … the cheap stuff is perfectly fine)
Normal amount of your normal laundry detergent

Set your washer to the longest and hottest setting it can do and add all the ingredients in with the clothes.  I just use a big plastic cup and pop all the ingredients in together (it’s safe to do so), then straight in with the clothes (cup and all). Set your machine, press start, go have a cuppa, hang it on the line when done and be impressed.

Hang your whites on the line to dry in the sun.  The sun has its own natural sanitising and bleaching properties too … and there is nothing quite like the smell of sun-dried laundry.

Frugal, thrifty and utterly effective.

I would only use this recipe once a month (or less frequently) on your whites.  The rest of the time I simply use our home made laundry liquid.

Take care folks – stay nice

Phil

$500K Lunchtime

Simple Food, Simple Money

Chatting to colleagues at work, it has been mentioned more than a few times how much money they are saving by working from home – less fuel, no train tickets, no parking fees, no lunches and coffees, no new work outfits, no $5 pitch-in for Bruce’s birthday or Karen’s baby shower, no Friday night after-work drinks, no Macca’s run on the way home etc etc.

This got me to thinking about how much a worker might spend on peripheries on a weekly basis ….. or even across a working lifetime. So I did the math on a worker who buys a coffee, a can of Coke and a sandwich each working day – that would be conservatively $10 a day. That $10 a day actually adds up to an eye-watering figure over the course of a working lifetime. If that $10 a day were invested wisely into a low-fee mutual index fund, that worker would have $568,000.00 invested at the end of their working life. That is not a typo, nor is it fudged math. All of a sudden, packing our own lunch seems like a powerful thing to do.

Generally speaking, cooking our own food from scratch is not only a wonderful skill and a fabulous culinary experience, it is also one of the key activities to building solid financial self-reliance for our future selves. The trick is to take the $10 a day and actually invest it wisely, otherwise, it will just disappear as a theoretical ‘saving’ into a nameless corner of our wallets only to be spent on something else.

Take care folks and stay nice.

Phil

Your Best Investment Return

Simple Money

The elephant in the room is money. No one likes talking about it. People will talk about anything but money – no wonder there is so much misinformation about money, budgeting, investments and money management. Meh.

Currently banks are offering 2% return if we are lucky, dividends from sensible funds and shares are offering about 4%-5% return and riskier investments are offering much, much more again (buyer beware). When we were young, we could get 15% interest on a term deposit and retirees and savers seemed to be onto a good thing with money in the bank. Gosh, how times have changed. But there is a legitimate way to get much better return on our money ….. for real, no funny business, nothing illegal or shonky. For the record, we get minimum 20% return and often more.

Clearly you think I’ve taken leave of my senses (maybe true ha ha!!) but no. Nearly anyone can get 20% return on their money. How? Easily. By saving (remember that thing?).

If we can sit down and figure out how to only spend 80% of our income and save the remaining 20%, then that is a clear 20% return on our income. Is this twisting the argument? NO! – It truly is profit realised after our expenses.

So many people churn and worry about their investment returns but in actual fact, it is our savings rate that will determine the bulk of the results of our investing. The bigger percentage of our income that we retain as profit, the better our returns and the quicker we will become financially self-reliant.

It’s time to shift the paradigm and start turning a profit from our income. All of a sudden, 20% return looks quite achievable.

Take care folks and stay nice.

Phil

Family Dinner

Simple Food

Family dinner at our house used to be every Tuesday night no matter what. These days, we are flexing that arrangement seeing as two daughters are working rotating shifts as nurses and another daughter is High School teaching in a country town. All of us love to cook and I am pretty good at washing up afterwards (some quiet time for me – ho hum).

Sometimes family dinner can be raucous with several conversations zooming across the table simultaneously. At other times it can be quiet and thoughtful with everyone just happily savouring the food. You can never tell which way it will go. More than occasionally there is endless sass, attitude and burn. At other times there are tears and disagreements but more often we are laughing that hard that digestion is simply impossible. I personally love dinner conversations that begin with “Remember when…” – they usually illicit a flurry of conversation that can end up anywhere!

We all love to cook, experiment with cooking and mess around with flavours and ‘insist’ on trying a recipe for the very first time when we have visitors (argh!). Nevertheless, it is far and few between times that we have had a bad meal (although there was my bread that we once used for door stops).

This week we had spicy beef brisket done in the slow cooker with steamed veg, mashed potato and oven-fresh Challah bread. For dessert there was Earl Grey Panna Cotta tarts. All from scratch. The house smelled delicious all day as the slow cooker did its magic on the brisket and the smell of bread cooking is undeniably heavenly.

We think cooking from scratch is totally worth while, even if the dirty dishes afterwards make a huge pile of washing up to tackle (no dishwasher yet) when all you want to do is enjoy the food coma and chat.

Take care folks and stay nice.

Phil

An Afterthought Garden

Simple Garden

The garden this year has been an afterthought, accidental even. Let me explain – the old house has needed a roof restoration after discovering 37 broken tiles and many others to be totally porous, new gutters because every time it rained the whole house became shrouded in a beautiful shimmering veil of water rivulets from the rusted gutters, all new fences as the old wooden ones were totally rotten and only standing up due to sheer will-power ….and…. a new kitchen as the old one is a mass of swollen chipboard, leaking taps, an oven that thinks it’s a brick kiln and worn out apple green melamine from 1978 (the kitchen is a work in progress still). So, it has been an expensive year – a year of building/renovating mess and big thumping tradesman’s boots everywhere (sigh). Consequently, the garden has been shoved way down on the to-do list. More’s the pity.

However, my daughters and I have not been able to help ourselves with odd plantings here and there. We joyfully transplanted the self-sown tomato bush and it survived delivering copious laterals which we pinched off and replanted too. It’s winter, but they are all flourishing and we will get a subdued crop of tomatoes nonetheless (hey, they were all free). The mint is raging out of control, the brassicas and beets are trundling along OK in 40 year old neglected soil, the radishes and carrots were sown together and doing just fine, the onions are totally sulking, the succulent butter lettuce is being harvested now, as was a crop of dwarf peas (already harvested earlier) and various seedlings and bits and bobs.

I’m not super keen on decorative gardens but certainly get all excited about growing our own food. Roll on later this year for when all the biggish items are finished on the old house and we can get focused on the garden. This coming spring we will be putting in 3 nice big raised beds for vegetables and Mrs HOS is talking about either fruit trees in pots of perhaps espalier – watch this space.

Somehow food gardening helps my overactive mind. As soon as my hands touch the soil, something ancient triggers in my mind and I am ‘elsewhere’ – does this happen to anyone else I wonder?

Take care folks and stay nice

Phil

Simple Ain’t Easy

Simple Home

Simple living may seem like a deliciously idealistic accomplishment, but in actual fact it can sometimes be just plain hard work. Cooking from scratch with a house full of ratty kids is not simple, neither is drying clothes on a rainy day without a dryer, neither is consistently shopping specials, mending clothes, budgeting or repairing things. Voluntary simplicity is not easy street (despite what you may see on Pinterest!). So why bother?

Voluntarily living a simpler life means that we become resourceful, resilient and self reliant. Voluntary simplicity means that we are consciously deciding what our lives should look like and working on achieving that without the distractions of things we do not need or that do not fit the criteria of our life. So, many ‘normal’ things probably can be called into question as being useful accouterments to a considered life. A lifetime of car loans, a wardrobe full of this season’s clothes, three new cars in the driveway, plump allowances for the kids, a yearly updated iPhone etc are probably not truly useful additions to a meaningful life …. and paying for it all is certainly not simple.

Essentially, deciding on what make us content, what is useful and what gives us lasting delight are the things we need to actively accumulate in our life. Just ignore the rest. Ignoring “the rest” is key to having money left over to save and invest. Thinking deeply about what makes us content (NB – content is very different to happy) and organising our life around that realisation can be a revelation. Reflecting on what makes us content is a real game changer – try it if you are game!

Being soft, sweetly entitled and convenience-addicted is the norm – it’s easy, yet covertly and poisonously expensive. Being content and resourceful is not the norm – it takes lots of energy, yet leaves us skilled, wealthier and deeply satisfied.

Take care and stay nice

Phil

20 Cents

Simple Money

The simple secret to having enough money is found in the humble Australian 20 cent piece, or a couple of dimes for our USA readers, or, 20 pence in the case of our UK readers.

The humble 20 cent piece seems so insignificant, however this is so far from the truth. Here is the secret – take 20 cents from every dollar that comes our way and put it away for the future. Simple. Elegant. Achievable.

The 80 cents that remains from every dollar that comes our way, is ours to spend and live on however we chose to – no questions asked. The 20 cents that is repeatedly retained, will quietly grow, just like the humble acorn, into a formidable income-producing asset over time. When the income from our accumulated pile of 20 cent pieces equals our basic living expenses, then we are officially monetarily free. In plain mathematical terms, we all should wisely invest 20% of our income/s to cover the needs and expenses of our future selves. We owe this to our future selves.

Another amazing mathematical observation is, that if every young adult was gifted $20K at the age of 20 (e.g. as a government initiative) and this was invested wisely in a tax free trust environment (and not a single additional cent added to it thereafter), then there would be no future aged pension required, no lifelong superannuation payments required, little aged care government budget needed because there would be $1 million dollars compounded by the age of 70 with a $50 thousand dollar wage drawable from it from thenceforth.  If this hypothetical scenario was adopted by governments around the world, it would save billions of social security dollars ….. but hey, this is very unlikely to ever happen. So guess what? – we’ll need to do the equivalent ourselves. Hence the 20 cent rule.

The younger we are the better this works over time, nevertheless, I was a very later starter and have been following the 20 cent rule with astonishing results (recent stock market crash included!) over the last few short years.  I have truly surprised myself how powerful taking 20 cents from every dollar that comes my way and putting it away for the future is … compounding is an amazing thing.

Take care and stay nice.

Phil

I’m Not A Minimalist

Simple Home

I love simplicity but I’m not a minimalist. That being said, I’m all for purging items that are not useful, meaningful or delightful – I totally get that.

Minimalism does not work for me. I love my things. I love the crockery and trinkets once owned by dear family members that have now passed, I adore my books, our cosy chairs and cushions, the Amish oil lamps, the handmade pottery as well as the pianola and pump organ. I love our vintage lace, the stockpile of materials and pantry staples, the crystal winking in the evening light and Beatrix Potter nic-nacs. I love my notebooks, fountain pens, diaries, ledger books, letters and cards. It’s all part of the feel of our home and connections to the past.

Despite all our stuff, we have a simple home. Everything has a function, a meaning or beauty ….. if not, it goes.

I certainly admire the concepts of minimalism but it leaves me cold inside. Give me a woolly rug next to the fireplace with a pile of books, the cat and a pot of tea any day. Living simply and having all the things we love around us are not mutually exclusive – as long as we can articulate the beauty, function or meaning of each thing.

Nevertheless, I am trying to minimise plastic in our home. I’m slowly replacing useful plastic items with quality glass, metal or wood alternatives – but it is a struggle. Plastic is so pervasive – the more I look, the more there is. Meh. The other thing we are minimising is our finances. Finances respond very well to minimalism – but more on that topic another day.

Take care folks and stay nice

Phil