Click to listen to the latest episode of The Richards Report featuring the Aussie Firebug.
In this episode of the Richards Report podcast I’m speaking with Matt, who is better known as ‘The Aussie Firebug’.
Matt’s journey towards financial independence started when he was in his early 20s. He started saving but didn’t really have a reason why he was saving. Then he came across the idea of establishing true financial independence. He came across the FIRE (Financial Independence, Retire Early) movement from bloggers he followed in the US such as Mr Money Moustache. From there he learnt about the importance of passive income and from that moment on he was hooked… he wanted to achieve FIRE.
The word ‘retirement’ in the FIRE acronym is a little different to what some may think it represents. It doesn’t mean stopping work at 30 and doing nothing for the rest of your life. FIRE followers view retirement from a perspective of no longer working simply for a salary, so retirement may involve meaningful paid work that people choose to do because they enjoy it.
The fact that Matt started this process when he was in his early 20s is important because the earlier you start saving and investing the better. It allows you to harness the power of compound returns for later in life.So Matt prioritised getting the snowball started as early as he could, and now it’s gaining momentum. He and his partner’s snowball is now more than $620,000. He’s aiming to reach $1 million and then reassessing if he will then retire or not. Not bad for a 29-year-old!
Importantly it’s not about how much you make – Matt is quite open and transparent about this. He says that his salary has recently gone above $100,000 but for most of his working career he has earned between $70,000-$90,000. What is more important than your salary is getting your savings rate as high as you can. The savings rate dictates not only how much you can put aside for investments, but also what amount of money you need to comfortably live on in retirement.
Matt is unsure what his days in “retirement” will look like. He doesn’t have anything specific in mind but hopes to have more time to spend at home when he and his partner have kids. He is also open to a career change and starting his own business one day.
For those thinking about trying to achieve this, Matt is open about the challenges people will face, especially if you’re trying to balance entering the property market, considering travel/backpacking, and most of all if you’ve got kids.
Matt acknowledges these real challenges and admits that sacrifices need to be made. He lives in regional Australia and is aware that the cost of living is much cheaper where he lives. But if you’re committed to achieving FIRE, you can make it as strict or soft as you want to make it.
Whether you want to achieve FIRE, or just improve your financial situation, his number one tip to people is to track your expenses. It helps you find out where your money is going, and where savings can be made.
Matt looks at potential purchases not from a mindset of just how much it costs, but is it going to make him happy, and importantly, is it worth the amount of “work” he has to do to own the item.
I think that I might need to have another chat with Matt in a couple of years to get an update on how he’s tracking.
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