Aussie Firebug: Hi guys welcome to another episode of the Aussie Firebug podcast, the financial independence podcast for Australians where I interview clever people who have already reached or on their way to financial independence. Our guest today is Serena Hung or better known as Ms. Frugal Ears. Serena works as a public servant but, is also a writer, blogger and foodie. A self-proclaimed frugalista Serena lives with her two sons in Canberra and has appeared in such publications as the Riot Act and the Canberra Times. She is currently writing a book about becoming a frugal multi-millionaire and one day hopes to be a billionaire

Aussie Firebug: Welcome to the show Ms. frugal Ears

Ms Frugal Ears: Thank you it is a real pleasure to have an opportunity to speak with you.

Aussie Firebug: First question I have to ask. What is a Frugalista?

Ms Frugal Ears: Good question, some people probably heard about a fashionista. Fashionista is someone who has very good fashionable taste on a budget. Well, a frugalista is the same it is someone who wants to live an amazing life, doesn’t want to feel deprived but, still wants to leave quite simply and within their means. I think once you take that concept you can really learn to appreciate some amazing things without having to spend a lot of money.

Aussie Firebug: Did you come up with this term or did you read it somewhere?

Ms Frugal Ears: I don’t think I specifically coined it has been original but now that you think of it I haven’t really seen it used a lot. No

Aussie Firebug: I definitely haven’t seen it. When I had seen it on your site that was the first time I had seen it. It makes a lot of sense I thought it was something to do with been frugal and been Ms. Frugal Ears and fashionista but, very clever term well done for coining that if you did.

Aussie Firebug: Where in Australia are you from?

Ms Frugal Ears: I currently live in Canberra have been here since 2000 other than 3 and half years of posting in Taiwan. This is now my home.

Aussie Firebug: Fantastic. Have you always lived in Canberra?

Ms Frugal Ears: No I was born in Melbourne. I grew up in and I did most of my high schooling and university in Brisbane.

Aussie Firebug: Wow, that is a bit of traveling especially, I am outside of Melbourne but we are currently not in the middle of winter but, I know how miserable and cold how Melbourne can be so moving to NSW would have been a nice change of scenery I am sure.

Ms Frugal Ears: Yea it was, although I was always a little bit of a book worm. So I struggled not been close to a library when we lived there in the early 80’s. There was not a lot of infrastructure there so it was quite different. I do actually like the cold of Canberra mind you it was snowing a little bit today and sleeting .It will be good snow in the rangers

Aussie Firebug: It is a very good snow season

Ms Frugal Ears: It is a very good snow season and I took out cycling to work just as winter hit this year minus 4 degrees and I am still on my bike most days

Aussie Firebug: That is dedication. Have you always been frugal?

Ms Frugal Ears: Yes, in my own way.

Aussie Firebug: Where do you think that comes from?

Ms Frugal Ears: Good question, probably my upbringing. I think my parents were frugal on both sides but in different ways. My mum is a fashion designer and you would think with that it would go a huge propensity to spend money on luxury handbags and luxury designer brands we certainly always lived in very big houses you know the sort of houses that sometimes it was a bit embarrassing to bring left wing university friends over to visit you. I tended to kept a little bit quiet sometimes. And aloof cause they were always big impressive places. But actually beneath that the average weekly budget spent or the clothes spent were quite small. Mum had always an amazing sense of style she just knew how to coordinate her articles and the clothing that she wore. Often it was a simple black t-shirt but with an amazing scarf and accessories and the whole thing did not cost a lot of money. Our shopping trips we didn’t tend to spend a lot of money we went to budget supermarkets. There was always this I guess kind of living the high life or appearing to live the high life at least but actually not spending a lot underneath. My dad too, he was a public servant. My parents are divorced so they live very different lives but there is a strong history in his family for strong community service and strong values of valuing people and giving generously to certain things. But not necessarily living in an ostentatious way themselves. So I think on both sides there has been a history but in different ways.

Aussie Firebug: Yeah it’s usually from my experience talking to people about where they have learned the value of the dollar or investing or being frugal is usually in the home experience they have had good or bad from their upbringing that usually dictates that. You live a relatively middle to upper class lifestyle growing up with your parents, they had great jobs it sounds like but they still

Ms Frugal Ears: They were very successful entrepreneurs. She did very well. I went to a fairly exclusive private school in Brisbane but she had a very strong work ethic. She was very big, very big about not giving us money. So if we wanted money we had to work for it. She would say well if you want money than come into my factory and work and then you can earn some money. She didn’t really cut me any slack you know. I had to work if I wanted money so I would always have part time jobs either with her or later as a check out chick or clerk and doing other things. The work ethic that she got from that and she didn’t get handouts and she was also very determined that she’d seen a lot of what she termed I guess rich kids who would give handouts. And she didn’t want my sister and I to grow up like that. So that was a kind of a bit strange because growing up particularly at university, people assumed that we had a lot of handouts, that we had gold spoons, that we had a lot of money. But actually we didn’t we probably had less than most people would be given from their mother or father. And sometimes that was difficult to reconcile

Aussie Firebug: And did you ever-

Ms Frugal Ears: And-

Aussie Firebug: Sorry go on

Ms Frugal Ears: But, I think in the end of the day that kind of worked in terms of instilling a strong work ethic and a strong saving history so it was good.

Aussie Firebug: I was just about to ask that some people resent their parents in that position when they are young and they know their parents got money but they won’t give them money for a trip or for a new car or whatever it is but they learn later in life that actually the lessons they learned were far greater than the gifts they would have gotten at that time. Sounds to me that you fall into that category with your parents which is nice to hear. So let’s talk a little about Ms. Frugal is and how it came about.

Ms Frugal Ears: Lovely, the name of it is serendipitous actually, my first blogging attempt was actually when I lived in Taiwan and I used to blog about certain restaurants and places that I liked to go to. At the time as an expat Australian living in Taiwan it was actually fairly cheap to go out. And I would often go out with my work so it wasn’t necessarily a frugal kind of view; it was more of a cross-cultural view. But then when I came back to Australia in 2014 my financial situation changed quite a lot because I was no longer on the expats salary I was back in the suburbs of Canberra and my ex-husband and I at that time had 10 properties between us.

Aussie Firebug: Wow!

Ms Frugal Ears: Sounds fairly impressive but in 2014 also there was a massive reduction in the common wealth public service particularly which affected [00:08:30] so there was a severe downturn in rental incomes and in fact we had a 6 month gap rental gap a lot of them went down on rent so it was actually quite a difficult time coming back to Australia no longer been on the same salary and also taking a hit with the investment properties not really been able to sell them necessarily even if we wanted to because the market conditions weren’t right. Things were pretty tense and then six months later I separated from my husband and suddenly I had that kind of burden of paying for those plus child care fees which in Australia, the child care fees in Canberra are more expensive than anywhere else in Australia before rebates they’re 100 dollars a day and I had 2 children in child care. Things kind of got quite difficult quite quickly and I knew I was always frugal and I knew I could find a way through that. So I just kind of dove into my inner frugality for those first few months when things were pretty tight and I tried not to think about the future of what if I run out of money or what if I couldn’t pay the mortgage or what if there was a major medical problem. I was just kind of at that stage I just sort of decided to focus on the day to day so my philosophy was one day at a time one thing at a time and that was what I kind of focused on. And then probably as I was sort of getting out a bit I realized that I wanted to get my writing mojo back. And it no longer felt wrong for me writing about Taiwan, because my ex-husband is Taiwanese. Because that no longer really reflected what my identity was anymore and while I love Taiwanese culture and I always will, it didn’t feel authentic for me to write about it in the same way anymore. Then I thought about it a little bit more and thought about what are my values and what is authentic to me and what is my life. I realized I was always been frugal and I was especially frugal now. And I felt there was message in there about the importance that when you have financial empowerment you can make important choices to do the things that are important to you and in my case it was getting out of a bad relationship and feeling a lot more liberated and empowered by that. And it occurred to me that I was in a good situation because I had a good job, I had investments, I was good with money so I could do that. I was scared but I could do that, there are a lot of women who do not have those sorts of choices and society may or may not blame them for staying in bad relationships but really at the time they may not have that many choices. So that has always been a subliminal back story that I do not always necessarily bring to the front because it’s really more of a lesson message about living a very fulfilling and happy and positive life. I am definitely always conscious that sometimes not everyone has lots of money so they have to do without. And so how do you make that so it becomes a challenge and something that’s and something that’s rewarding rather than something that is all about deprivation and misery.

Aussie Firebug: Absolutely, so much to unpack in that. You wrote a very moving piece called money and divorce which I can link to in the show notes. You talk about how important it is for women to have their finances sorted especially with yourself going through a divorce. Can you just touch on that a little bit more; you mentioned it a little bit before but how important is it for you I know you have two sons, but let’s imagine you have a daughter. The values that you would instill into her about having those finances sorted for all different reasons but especially I feel as though majority of society look to the man to handle those finances and you know the woman in the case of a divorce doesn’t know where to turn.

Ms Frugal Ears: That’s really interesting; I think things are changing a lot. The family court has this vision of the man as the bread winner and the woman is a stay at home mum. That is not always the case. In my case I was the main income earner and I actually had to give my ex quite a lot of money during the divorce settlement and that is just how it is. I guess that is just kind of one thing I would say. It is interesting that you picked this article because when I wrote it I didn’t think too much about it, it was kind of one of this things that I kind of went oh well you know it was my experience maybe there is something in there that would help other people. There was actually one friend who herself is also single who actually contacted me and said wow Serena you are so courageous and I went, for what? I just didn’t even kind of think about it. Now that she mentioned and you mentioned it, it seems like somehow still divorce is a taboo. People can sort of understand how people get divorced and they might somehow think that it is on some level their fault because they did not manage their relationship perfectly. But, the money side of it that goes with that is really talked about and that is really important because there is a lot of things that goes with that. For instance one of the first things that is really hard is that so many things are so intertwined. I mean when I broke up with my ex we had been together for 17 years, we had 10 investment properties together; we had other shares and other investments together. I mean nearly all been wound back now but that doesn’t happen overnight. You know it might be tempting to say you will never speak to this person again but, the reality is that you’ve got bills to pay and so you have got to have measures in place to do that. One of the first things I did was to put in place on our bank account was that we would always require joint signatories. Which is a fairly dramatic thing to do but also very important because especially in that initial divorce time when you’re separating there can often be some problem with the lack of trust and you do not want someone to go into your bank account and suddenly withdraw a 100,000 dollars and go off to Rio and you never see them again. And I am not saying that would have happened with my ex I am saying things are very flawed and you just want to make sure both sides will do the same thing

Aussie Firebug: Absolutely

Ms Frugal Ears: At the time and actually still I’m banking with I&B and they are one of the few banks who do that electronically so still when we pay for joint things with my ex and I they’ll send an authorization to my ex if I pay it first or pull it through the system first then send it to him so that both of us electronically agree to something before it goes through. So I guess that is one of the first things, the second thing is sometimes the initial focus is very much on custody of the children. Which don’t get me wrong is important, but the property settlement stuff can often lug and delay and often it can be almost 12 months or 2 years before you’ve got things sorted. I am three years out now and there is still two properties that we just resolving now. And so what that means is that you got this immediate need for money but your assets are tied up in this joint sort of situation and you sort of can’t get at them for a while. It is really important to still have those investments you do not want to sell them at a bargain basement price just to get rid of them. But by the same token you have immediate things you’ve got legal fees, childcare fees, groceries to pay for. You’ve got quite a lot of things that are happening. So that’s one thing that is quite difficult. The other thing is often unclear exactly at what point of time after you separate do finances become single or become joint. For instance I was quite scared of putting a lot of money into my bank account because you know I might have been saving and saving and saving and he might have been spending, spending and spending. You know you did not agree until 12 months after the divorce so everything is 50 -50 or 60-40 or whatever. So for a while I was keeping cash at home I know it sounds very weird. It sounds very like storing things. I was never really comfortable with that because it was a really bad investment strategy if you look at it on the scheme of things. But in those first couple of months when you are just not sure about things, sometimes that’s you know the only option you’ve got is just to keep physical cash on you because you know that is actually yours. So there is a lot of things in fact we could probably talk a whole podcast about you know managing finances after divorce but, I guess one of the key things is to reestablish that trust as quickly as possible because you can fight and you can fight and you can fight over what might be right but at 500 plus dollars an hour on legal fees you’ve got to ask yourself is it really worth it. You have to take a very pragmatic approach and to try wherever possible to come to an agreement that’s mutually workable. And then just to walk away from the rest and to trust that when you are in a happy place again that you channel abundance and have faith that will happen. It is very much a forward looking strategy rather than looking back about what I have lost, rather what you are gaining.

Aussie Firebug: Absolutely. I think this is such valuable information for anyone going through something like this in their life especially after a break up or a divorce you know and to know what to do next time and to have perspective of someone that’s through it like yourself and I think it is great like you said, 500 dollars an hour for legal fees and you do not want to sell at a loss. I think that is an important thing to note. I always tell people if the cash flow is strong especially I invest in property. I have three properties myself and I also invest in the share market. But with the property I always tell people the lifeblood is the cash flow of the property because if you’ve got great cash flow you know, they keep talking about this bubble in Australia and every newspaper you read is predicting when the bubble is going to burst. And even if it does burst, unless my rent drops by 2/3 my strong cash flow position will keep me through until the recovery phase and eventually hopefully it goes back up in price. So why would I sell in burst, why would I sell at a loss unless I am forced to. Now I understand that there are some people who maybe max on their borrowing capacity and few percent interest rate rises could ruin them and that is a bit different situation. I think it is really cool that you and you ex-husband were smart enough to know that okay we have finished our relationship together but it doesn’t mean that we have financially ruin ourselves or sell at a loss and lose tens of thousands you know, heaps of money and you can work it out and slowly sell off when the time is right and everything like that so kudos to you for going as adults.

Ms Frugal Ears: It is not an easy one. I am sort of in a slightly different phase to most people because I am in a consolidation phase. I did sort of think earlier on it would be best just to keep those properties because in a sense it does make sense. But I guess both of us had the desire that we just wanted to separate things out and go our separate with that as much as possible. You know even though you’ve got a property manager you still have to communicate over those properties and you’ve got to make joint decisions about them. And when you are not in a happy place it gets harder to do that. For instance one of our properties we bought with the intention of developing them, actually two of them we did but one in particular we were half way through a subdivision and you know for a while I thought maybe we just hold on to that together and we continue with the subdivision and maybe we develop it. But then I was kind of like oh hang on that is pretty stressful you are going through a divorce with someone and then you will be building a property with them! Like you know a normal person building a property is quite stressful. I think the pragmatic thing there was that he wanted to buy me out on that one and I went look ok even though perhaps I make more money in the long run it is probably not worth my negative energy so I think we have been very blessed that we’ve been able to talk together about how this, you know it’s not perfect but, nothing is perfect. But we certainly have not made crazy decisions because we have decided to fling mud at each and hate each other.

Aussie Firebug: I think that is the most important thing you need to strike a fine balance I tend to agree it will be pretty hard to go through that with someone that you have just been through a divorce with. But at least you guys you know were on the talking terms and you could settle it without too many losses with slinging the mud. It could have been worse I guess. Now this is the financial independence podcast. Was financial independence a goal of yours and your ex-husbands when you started? We’re you investing before you met him or did you sort of go on that path together?

Ms Frugal Ears: Well we met when we were at university and neither of us had much money, so he had just immigrated to Australia from Taiwan and I was finishing up my studies and had pretty much depleting my savings. Just because I was at the end of that, so no. But when you talk about financial independence do you mean like you know retire by the age of 40 kind of financial independence?

Aussie Firebug: We’ll just say it’s having enough money to choose what you want to be able to do in life not necessarily retiring to just play ball and read books all day but just having that financial security, let us call that, for your investments to generate that passive income. Was that, did you start investing with that goal in mind?

Ms Frugal Ears: Yes and no, I know the issues in our marriage was that we disagreed with this. My philosophy had always been that I wanted to own my own home. And I wanted too own my own home outright and I eventually did with my last property which I just sold and now moved into the city so I now have a mortgage again but it is giving me a different lifestyle. But that was always very important to me to have that sense of home ownership for various reasons; I think it’s just a security thing. And also because I mean I work in government and you would think that would be an incredibly secure job, I guess to the outside public service is always is. But you are very much on the whim of public policy and I’ve seen people suddenly find that there is a new government come it, there is a new government policy. It might be something that they are very strongly opposed to on a moral ground for instance like on the immigration issue or defense issue, but because they have so many debts or they’ve got you know expensive private schools for the kids, they’ve got a big mortgage; they stay in these jobs that they really hate that they feel morally opposed to because they have no choice. Now I have always wanted to be in a position that I don’t have to do a job that goes against my values because of the money, so I want to set myself up, so that if that if something do happen, if there was you know a crazy I don’t know Trump style government in Australia, touch wood, touch wood if something happens around the world right now, they came in and said right now we want you to go and build a wall somewhere. Kick the New Zealanders out or whatever and I thought that was wrong, then I could you know

Aussie Firebug: We are lucky we because we don’t border any country east directly so I think if something you know a Palin style prime minister

Ms Frugal Ears: But anyway something that I was morally opposed I mean this random example then I could say check here is my resignation and it could be fine.

Aussie Firebug: Sure

Ms Frugal Ears: That said I do have some reservations about the whole financial independent retire early moment in a sense because I guess I felt in my marriage that we were so focused, so focused on building up a big portfolio that we went actually living in the now and that just meant we didn’t really sort of went on holidays. We never really went out to restaurants; we never really kind of did a lot of – even go to shows. We’ve been to a few but not a lot because we were really so overstretched, that was always a bit of a struggle. Now it’s okay for 5 years, like 5 years I didn’t mind doing it because I could see that we were growing properly. But after 5 years I sort of asked well why we are doing this. So what, like are we going to wait till we are 80 and then we retire and then you know, you travel the world? You know like, you not, you not fit enough to do much at that stage, in fact last year I took up skiing again which I hadn’t gathered 25 years in doing and there is no way I could have done previously, because you know it is a fairly expensive sport, not wait when I’m 74 years and I’m dead and my kids I just wished the most amazing exhilarating time and you know, I guess right I would say that my goal is one of balance. So I’m still a very aggressive saver and I’m still a very aggressive investor but I don’t want to wait until I am you know too old to enjoy my life before I enjoy my life. I want to have balance, you know I guess the richest man in Babylon which is you know one of the big savings bibles, [00:26:50] dozens are talking about the importance of enjoying your life, because it is a bit like going on a diet where you sit and say you are only going to eat breakfast and water for the rest of your life, I mean what are you going to do, you are going to pig out on chocolate cake. Like you sort of a little imbalanced with that, so I guess my view has changed a little bit, I don’t want to be so much on a fire course and I am waiting for that one day, that magical one day where I’m going to enjoy my life, where I sit on a bench and finally have freedom, I want to be creating that in the now all the time

Aussie Firebug: Yeah great answer and I couldn’t agree with you more. I think when I first, when I first realized financial independence was even a thing I remember reading about it. I thought that I don’t know anyone that does that can’t be a real thing and I started going to some investing forums, some property investment forums and I was meeting people that were you know 45, 50 that were leaving off their property and their income from their property on them. So when I realized there was an actual thing I dedicated so much of my time and energy into that and at the very start you can burn yourself out because I was missing a lot of things, every dollar mattered. Every dollar I spent felt like I was like you know, every 50$ I didn’t put into investing was another day hard to work, was a day that I didn’t get financial independence. And I did that for a couple of years and then me and my partner we joined finances last year and she sort of balances me out because she is pretty frugal for a normal person but I’m on the absolute extreme side of things. We balance each other and I think we strike a fine balance that we are enjoying our life at the moment and like as opposed to how much we spent in the past year. I think it was just over 50,000$ for the whole year which included everything, living costs, eating cost and we went on two holidays. Like it was excessive in my eyes but for her it was quite a lean year but I think half the fun is the challenge of getting there. Are you going to enjoy yourself getting there because I read a lot of its mainly US based bloggers but they say that if you are not enjoying your life, one dollar extra in your bank account to make you fund it like technically make financially independent is not going to improve your life, you need to be happy and then keep investing, keep saving and then one day you will be financially independent. But that won’t change I mean you are not going to wake up with a revelation one day being financially independent. You need to sort of build your life based on frugality but live a happy and meaningful life and enjoy the journey so when you get there you are already in that state of mind and then you have just have the choice okay maybe I like this job, maybe I don’t like it so much anymore I am going to try my hand on something else now and I don’t have to stress and worry about paying off my mortgage or paying grocery bills for my family and stuff like that.

Ms Frugal Ears: Yeah I agree with you, there is the underline issue here about what is money and what is value and if you are not using your money to live a life that is intentional for you and is meaningful for you, it’s just numbers in a bank. It doesn’t mean anything, I mean if you are just living a sort of heathenistic I don’t care about tomorrow or I’m not thinking in a mindful way just spending money left, right and center. That is also not living an intentional life, that’s not respecting yourself, not respecting your money. You’re not thinking critically about what you are hoping to achieve or to live with but you know I think sometimes I had felt that in the frugal sphere there was and it’s probably a little controversial but there tends to be a lot of stay-at-home mums who are frugal and you know I have nothing about peoples life choices. Of deciding whether they work or whether they don’t work but I do wonder sometimes with the controlling relationships whether they have full power over their own money. Whether they have this self-worth and the self-understanding to demand for power of their own money and it sort of almost this subjective depravation of you know rather than thinking with abundance about what can that can attract in my life, it’s like oh I save 5c today.

Aussie Firebug: I am hearing what you are saying and someone posted a thread the other day about you know you almost feel like you’re better than, if you someone spending a lot of money on a new car like for example when you said someone bought you a new car, at one stage of my life I fell into this category myself. You almost feel superior, like that is wasting so much money, they could have invested in it, there are idiots sort of thing but like people they spend their money how they want to spend their money and it is all about balance and you know you do have to live your life. I think there is something to be said about, you know the sacrifices now that you are willing to make so that you do enjoy a better life in the future you know that is definitely true but it is all about balance with a lot of things in life. You know with most things is all about the balance.

Ms Frugal Ears: I hear you; I read a blog post I think in January this year or December. So I had this amazing meal last December, I had this some 7 course seafood devastation with matching jeans and local wines. An amazing meal, unfortunately our restaurant is now closed in Canberra but it was just something to say, it was just one of these memorable meals and I felt almost guilty at this stage like how dare I do this because I am a frugalista, frugalists don’t go and have 7 course sea food crustaceans you know. We are you know, a miserable batch, we make due on foraged wheat which I do often eat. Then I thought about this season, a true story of my life and in this case I was actually invited to that restaurant because I was invited to do a food review. So it was like actually I wasn’t paying a seat at all, I mean in a sense it was to be a bit crass free food. It was actually quite frugal but that is not why I was doing it. I was doing it because I wanted to find out about this restaurant and actually tell a story about it and I’m quite passionate particularly about promoting Canberra as a food destination. But you know then I thought a bit more about it and I thought if I am a frugal person why can’t I enjoy my life? Why can’t I save for that skiing holiday I always wanted to, why can’t I do the things that I always dreamed of, like why should I always have to feel guilty about all these things I mean it’s a valid judgment.

Aussie Firebug: Yeah absolutely and I think some people as well from the outside they don’t quite know you know what the fire crowd is about and the frugal people for that matter. They sometimes think that these people are living of breast sticks and they don’t turn the heater on ever and they are saving every single dollar and they are going to be retired when they are 40 but they haven’t lived a good life. And not about that, it shouldn’t be about that in my eyes. It’s like you just live a sensible life and there is just so much bullshit that you can cut out that cost of a whole bunch of money that doesn’t improve your life whatsoever. A whole bunch of commercialized crap in the world. It is easy to cut it out and you can pay half your bill straight away, and then there is the stuff that’s really important to you that does cost money and that is okay if you have a budget and you’re sticking to it or you are being good in other areas. Splurge, buy that new dress or go to that fancy restaurant, do whatever it is that makes you happy but just, it is all about balance and make sure you’re not being excessive and you know you putting the money where it is being financially responsible.

Ms Frugal Ears: There is so much clutter, there is so much clutter, I think people have these houses that are much bigger than they need filled with stuff that they don’t need and they don’t speak to their kids, don’t speak to their parents. It’s all just clutter.

Aussie Firebug: Do you know when I see those big houses these days; we’ve only been living together, me and my partner for a year, over a year now. But I only moved out of home 2 and half years ago. And before that I was like yeah big house, it is going to be awesome, have like 10 cars whatever like you know dreaming. And now what I think about when I see these huge mansions is how long will it take them to vacuum that house? I am like they better have a maid or something because I am like I could not. I spent a Sunday vacuuming that house and it takes long enough, it is a two bedroom units, it is tiny, it’s like I don’t think I ever want to own a big house. I want to own a nice house that is very, like it has a lot of very good technology in it because I am in IT and I’m also in a government by the way which is just a funny tidbit but you know I would like to have a lot of nice things and you know all up to date with the tech but the size of the house doesn’t bother me. I see these big houses and see people mowing their lawn for the whole Sunday, some people like that I guess it is just not for me.

Ms Frugal Ears: You know I am just going to put it out there maybe that’s just a limited belief. I know I have had a limited belief for a long time too about not being worthy of a big house or not wanting a big house and that perhaps reflects my childhood too where there was a lot of emphasis placed on those sorts of things. And I just acknowledged that’s there and sometimes I need to tell the universe that I’m worthy and should I choose to have a big house it’s okay. Then I downsize to a three bedroom apartment in Canberra where I can now cycle to work and I can now walk to local cafes and restaurants and walk to my kids schools and I’ve drastically slashed my energy bills and you know I am very happy, I spend a lot of time on house work and a lot more time on riding and it’s a very meaningful change to me.

Aussie Firebug: That’s great, now you were speaking about restaurants, you know going out to eat and stuff, do you want to chat to us a little bit about the 50$ a week challenge that you have going

Ms Frugal Ears: Thank you, well this week I actually celebrate one year of living on 50$ a week which is for food and groceries and toiletries. So this is for myself, my two children aged 5 and 7 who are with me probably about 80-90% of the time and then you know I am feeding other people who come and visit and that type of thing. That probably sounds very restrictive but you know I started it a year ago because we were going to move houses at some point, I didn’t know the exact date but you know I sort of had this vague plan of selling and moving. And I knew I had too much in my cupboards and fridge and I sort of went look lets us just stop buying stuff and lets us just try use up some of these. The weird thing is that a year later I probably got just as much food in my fridge and in my freezer and in my cupboards, dramatically I managed to cut down what I throw out. But certainly none of this is starving and it’s really been quite an eye opener because I think sometimes when we shop we buy things out of habit. We have these big trolleys and so then you think you’ve got to fill them up with stuff. And so on average Australians throw one in five shopping bags full of food and this isn’t like bad food. It’s things that just never get opened. And you know the ritual for most Australian families is every weekend you go through your fridge and you throw out stuff.

Aussie Firebug: Such a waste isn’t it?

Ms Frugal Ears: So once you sort of accept that you are not going to starve, I mean I’m overweight. I think most people I know in Australia are overweight, probably not many of us are going to starve you take that as a basic premise and then sort of think how you can use what you’ve got creatively and you accept free food from other people and you know I forage from time to time because I like to do that. I like to eat local and I like to forage. And you think of low cost ways to make things. It’s actually; it’s not as un-achievable as you might think. That said, the provider here is almost 5 foot tall woman who perhaps doesn’t exercise as much as she should be even take up cycling, actually probably don’t need to eat a lot. And I go out a lot whether I am invited to food reviews or work events, social events or someone’s house, you know I think it just happens and I feel a lot of people in Australia are same, probably out once or twice a week and that is not probably factored in your food budget either. But I have young children who are picky eaters, particularly my oldest they don’t eat large amounts of food. If I had say 4 teenage children I would probably need a slightly different budget but definitely it’s achievable and probably my, I mean 50$ is actually, there is a fair bit of slack there. I could probably do it on maybe 40$ if I really tried,

Aussie Firebug: That is unbelievable, 50$!

Ms Frugal Ears: It is quite achievable and I think the big thing too is cleaning products because we spend a fortune on cleaning products and it is one thing that we probably don’t need anyway and that is a big part of it too

Aussie Firebug: That’s absolutely incredible, I know for me and my partner food, the grocery bill is the second most expensive thing that we spent on last financial year it was, so it’s rent, always rent as number one and groceries is second and this kind of worked roughly in my head per week we would roughly spend 150 bucks for two people, 150$ each week and you are absolutely right with the amount of waste the Australian, not that I know about the rest of the world but we chuck out so much stuff in Australia definitely and I used to work for Coles, I worked for Coles for 6 years when I was working part time. And things would come in and it would be like a tiny bit dented or damaged or whatever like perfectly good food and I will be chucking it out and I will be like can I just eat it? And they say no we can’t let you eat, if something happens and you get sick or something you know Coles we would rather chuck something out than or go through a legal battle if something was to happen to you. Which sort of makes sense but like really there is like so much good food that gets chucked into the bin every single night in like probably all around the world and you think about the stage that it took especially meat and poultry stuff like that. You know they raise it, they feed it, water and everything else that goes into making that product for it only to be chucked down the drain is incredible, isn’t it?

Ms Frugal Ears: It is, I’m, I’m not a good vegetarian, I was for 10 years some time ago but I must say I still get upset whenever meat is wasted I mean an animal has given up its life for us, for our nutrition, I just, it’s sad when I have to throw out meat, I actually feel sad about that

Aussie Firebug: Yeah, actually my sister did a mini documentary I guess you’d call it. I think there’s no special name, it was about dumpster divers in Australia and people it was really interesting. It was people who yeah would go to dumpsters and they were like, they would have jobs and stuff they weren’t homeless. They were people that had money and everything but some of them did it out of principle. That is pretty extreme but just to show you can live a perfectly healthy life without actually buying food. Now I am sure not what most of us would do but I feel like it was interesting, it was a pretty good like miniseries about the dumpster divers in Melbourne and stuff like that and I think that was pretty cool

Ms Frugal Ears: Now I have a friend who is a dumpster diver, she might have not been inspired by that documentary, I am not sure it they had a lot of comment in frugal cycles, it is in my blog about that phenomenon, I mean I have been aware of that too because there had been some talk I think any decision from the Tyword gazette which is a US publication which is a bit older now. She’s talked about dumpster diving as well so there has been a move for that in the states. Maybe just because I may be time pressed and I don’t have much time away from my kids, I wouldn’t take my children dumpster diving just because I think for young children it’s probably not really that safe.

Aussie Firebug: I wouldn’t do it myself, it is just interesting.

Ms Frugal Ears: Yeah I know I totally do agree that there must be that principle of avoiding food wastes. So if I was single and had lots of time it’s probably something that I would do. What I do, do however is that I am a member of the buy nothing project which is a Facebook group. There is a number of groups out of Australia and people would regularly be moving house and they would just have things in their cupboards that they don’t want and I always would put up my hand for those things. So in fact last week I picked a half container of grape seed oil and two thirds a bottle of lime juice cordial that I make limes and bitters from. And I had certainly no issues whatsoever from accepting free food or used food from people. I’d rather do that than it goes to waste and most of my friends know that too and so people going on holiday and they’ve got leftovers they give it to me and you know I’d like to think generosity comes from the heart. You know often I’ll cook something and take it to church or have a blogging friend right up the road doing things quite tough, she has a sickness and she doesn’t have a lot of money so sometimes if I’ve got leftover food I drop her off some soup or something. So I think the generosity does come around and it makes people, I accept with gratitude, I don’t accept from a place of neediness, I accept with gratitude and I pass it on.

Aussie Firebug: Sure, so this the 50$ a week challenge, is that something that readers can sign up to or how does it work? You are running a challenge aren’t you on your side?

Ms Frugal Ears: Yes I am running a challenge in September to encourage people to do it and the feedback has been fantastic. I am really excited about it, so people can join by checking it out on my blog which is Miss Frugal Ears on www.msfrugalears.com.

Aussie Firebug: I will put a link on my notes

Ms Frugal Ears: Thank you, or else they can join my, the Facebook group which is frugal dare to millionaire and participate in the conversation about how people are going with that

Aussie Firebug: Very wise also I’ll put that in, great now if you could give one bit of advice to someone who wants to become a little bit more frugal, what is your number one go to advice for someone growing that’s not very frugal or even if they are pretty frugal?

Ms Frugal Ears: This is a good question because people often think like you have a magic talisman. Oh, I need you to fix my life!

Aussie Firebug: I get that a bit as well.

Ms Frugal Ears: Yeah I can imagine I think the number one piece of advice is to record you’re spending. I mean there’s lots of apps you can use on the phone these days and even just having a really old fashioned diary in your handbag or just keep it with you. And every time you spend money on a cup of coffee or you spend money on lunch or you spend money on something you write it down and after a month you look at the amount you’ve spent and you know pretty clear where the money is going and then without having to have a big discussion about what is a want or a need, it really does, if you know you’ve got to write it and track it will make you regulate whether something is important or not.

Aussie Firebug: Do you know that is the exact advice I give to people, that is my go to advice that I give to people as well. I say you record your spending because even if you don’t do anything about it I promise you, you will see something in there record it and you will be like, what the, how do I spend that much money on that like are you serious? It’s, that is the best one, that is my number one go to as well. What do you use to track your spending just out of curiosity?

Ms Frugal Ears: Yeah good question, I used to for a number of years use my diary that I kept in my handbag and I was very happy with a particular credit union that I was with at that time they gave it to me for free every year and I used to hang up for that because it used to cost 2$ to buy an equivalent but I now use an app called good budget. It’s like a proper book envelope kind of app and it is not sophisticated, I think there has been a number of having more bells and whistles. But it is just easy I can do it and I can do it straight away and I don’t have to worry about it. At some point I need to upgrade to a more fancy one but look that just works. I try to use cash wherever possible to and that really helps too because there is something like physical cash that can just pay waving it onto your card and that just really reinforces the fact that you are spending money.

Aussie Firebug: Yeah, I am, I use Pocket-book, well pocket book is the app, the website is pocketbook.com and I like it. It’s funny you say you use cash, I actually always use card. And the only reason I do that is because Pocket book links into your bank account, can link into your bank and read all the transactions. So I tried to do everything on the card so that it can read it whereas if I do it with cash I have to like figure out where I withdrew the cash or if it was safe way or come up with the groceries it automatically categorizes the transactions which is a little bit of a smart in the software and I sort of a re-categorizes to say whatever I spent that cash on, whatever works for you right, like whatever works for you just stick with that.

Ms Frugal Ears: Yeah, exactly, exactly but sometimes the harder you make it to spend money, the less likely you will actually spend it.

Aussie Firebug: Absolutely! Absolutely

Ms Frugal Ears: The easier it is, the faster it goes.

Aussie Firebug: Alright we have reached the end of the podcast; here time has flown, where people are listening and want to get in contact with you, what is like the best place to reach you?

Ms Frugal Ears: The best place to reach me is via my blog Miss Frugal Ears or they can also find me on Facebook also as miss frugal ears or on Instagram as Miss Frugal Ears

Aussie Firebug: And all those we will be in the show notes for the audience convenience, so you’ve enjoyed this podcast and want me to make more make sure you drop me a comment and ratings on iTunes, search Aussie firebug and you will find me, I’m also on www.soundcloud.com/aussie-firebug, sure of for this episode and a transcript will be found on my website, um thank you so much Miss Frugal ears and it has been an absolute pleasure and I hope you enjoyed as much as I did

Ms Frugal Ears: Thank you, most definitely I do feel like someone who is in a more similar page.

Aussie Firebug: Alright, thanks a lot.

Ms Frugal Ears: Thank you! Bye

Aussie Firebug: Hey guys, welcome to another episode of the Aussie Firebug podcast. Podcast, the financial independence podcast pool Australians where I interview clever people who have already reached on the way to financial independence. Our guest today is Pat from lifelongshuffle.com. Pat is 29 year old construction engineer, working in Sydney who’s planning to retire early within 10 years. Pat, welcome to the show

Pat: Hey Mat, how are you going on? Yeah thanks for having me on the show.

Aussie Firebug: Yeah, not too bad mate, not too bad. Where does lifelong shuffle originate from mate?

Pat: Well, a few people have asked this question and it’s just kind of my brain child. I was a bit bored at work one day and I was you know, just thinking about…I have to get out of this and I was reading other blogs and I thought, this looks easy enough, I’ll start my own blog and I decided to call it lifelong shuffle. And the story kind of goes back to one of my mates who used to have this kind of really weird dance that he used to do before he would hit on some girls at the bar. We used to call it the Ken Host Shuffle, and for some reason I was just thinking of that on that day and it turned into part of my blog name.

Aussie Firebug: That’s a very funny origin for that name. Does he know about the blog?

Pat: He doesn’t know about the blog, I’m not sure if he knows I copy pasted the name of it on the dance that he used to do.

Aussie Firebug: Wow, the way I looked at it like lifelongshuffle I sort of you know, was a bit of a metaphor for shuffling through life in a particular way which is what you are about you know, looking through the wind of everything like that. That’s funny; it has that story behind it.

Pat: Yeah.

Aussie Firebug: So what was the original shuffle called?

Pat: The Ken Host Shuffle.

Aussie Firebug: The Ken Host Shuffle.

Pat: Ken Host is just a place in kind of out of Sydney where my friend comes from.

Aussie Firebug: Alright you know if you blow up and the blow comes mainstream I might come after you for some royalties so, Ken Host Shuffle royalties maybe; very funny. Did you always want to retire mate? Or was it something that you discovered later in life and you wanted to pursue?

Pat: Yeah I mean, not straight away. You know, when I first started fulltime work, really exciting and really interesting to me and did the university thing for like five and a half years, so kind of all that youthful excitement and energy was, I had it, kind of like everyone else does but after several years of doing that you know I just began to drain on me as it does and I’m in the construction industry of course I must have already mentioned that on the podcast. And it’s just one of those industries which it really kind of screws people down with really long work hours and working weekends and just kind of lots of pressure on the field. And so eventually a kind of desire grew inside of me and there was a tipping point and eventually I kind of went on google one day and I tried to start looking up that early retirement and I came across a few blogs and almost immediately it just kind of all really made sense to me. And it’s like well I’ve kind of always known I didn’t want to work forever, I never really had a detailed plan to get there but once I saw those blogs and I saw other people that had changed it and other people who were trying to do it kind of really cemented the idea in my mind and yeah, it was born really quite quickly.

Aussie Firebug: It’s such a common thing you know that you go online, you know maybe not sure what you are looking for then you come across one of these blogs and all posts and whatever and when you figure out you know people are really doing it, it’s sort of like the light bulb moment. I had that when I read a book but it sound like you read it on a blog. Can you remember which blog you were reading when you figured out like this is a thing and this is what you’re going to try to do?

Pat: Yes, so the very first blog I came across and I had a lot in me that I can’t really remember how I came across it, because it was Bill Carry Creko, with James, I’m not sure if you are familiar.

Aussie Firebug: Yes, I have read some articles before, I don’t follow as much as some others but yes, he’s been very popular.

Pat: Yeah, and to be honest that was one of the only ones I read before I really started my blog and before I kind of did some more detailed research into the ozzy scene. I mean it wasn’t until a bit later before I started kind of well, what other bloggers are out there really started to search, and kind of found them.

Aussie Firebug: Yeah I know that. And is this sound like, you know you mentioned that you always knew that you wanted to not work forever.

Pat: Yes.

Aussie Firebug: Has that been in your mind since you were a kid or was that an influence that you know by your parents or your upbringing or anything like that?

Pat: I don’t think I was influenced by my upbringing, I think it’s, to be honest I don’t think so at all it’s just something that you know when I was at work the concept or idea, a conventional early retirement really appealed to me. When I say conventional I mean five or 10 years early.

Aussie Firebug: Yeah.

Pat: Kind of not retiring at 65 like my father had to and so I started you know, investing my money well before I had the idea of retiring very early and I kind of think that investing that money was kind of a part that conventional early retirement goal. But yeah, it kind of, I really became focused and determined obviously kind of late last year, early this year when my blog was born.

Aussie Firebug: Yeah, who taught you about investing?

Pat: You know Mat, absolutely no one.

Aussie Firebug: At all?

Pat: Yeah, really. I think I’ve read a bit of your blog and you’ve mentioned the same thing you’ve kind of come from a wonk family and you sort of started your culture in investing in real estate and everyone is just like that you know, you have to buy a house, rent money, debt money et cetera and I didn’t go and invest in any real estate but that’s partly because my parents and my extended family would just really sort of anti-kind of securities or anti-equities, that’s you know, for my whole upbringing.

Aussie Firebug: Which actually is the common thing with you know baby boomism you know, it’s always bricks and mortar as a safe bet and you know, anything in the stock market is what I gain into them.

Pat: Yeah, exactly. And I had an uncle that lost big in the stock market and I think my father especially when I was young it kind of sounds like he was exactly like you said, terrified of the stock market. As far as he was concerned it’s just gambling your money which of course we know not to be the case after doing some varied research, yeah.

Aussie Firebug: Yeah, I know that. So just good said of that question, what are you investing in currently?

Pat: Yeah, so I’m kind of almost 100% shares at the moment. Perhaps at any one point I’m not just 100% just because I’m waiting to pile up a bit of money so I can then

Aussie Firebug: Oh yeah, sure.

Pat: More shares in a sort of cost effective manner. But yeah, mostly Australian equities with that kind of a really tiny exposure by what I can tell everyone else’s standard to international equities.

Aussie Firebug: So how much percent would you say is Australian equities?

Pat: I think at the moment it’s 80 to 85% Australian equities.

Aussie Firebug: So what’s the reasoning behind that?

Pat: Well, I’m not sure if you’ve read my Franking Credits article.

Aussie Firebug: I have, great article by the way. I would definitely link that in the show notes, it’s one to definitely read if you are unsure of the Franking Credits.

Pat: Yeah so I actually found that kind of bizarre, well not kind of bizarre like I understand the sort of how everyone wants a lot of diversification to head against a bit of risk from the Australian market not doing so well, but those Franking Credits, you know they literally are like an extra percentage point on your returns and you kind of mentioned to anyone that you’re going to go with this asset, cross with that asset, cross when this one has sort of one percent cost involved, they’d be like , “What are you crazy? You’re going to invest in an asset clause where you are paying one percent higher fees”

Aussie Firebug: Yeah, it’s blasphemy.

Pat: No, yeah exactly. It’s all kind of investing in Australian equities like that kind of what, Wow, I’m getting an extra percentage point of returns per year which of course is gigantic, and it can really speed up the investment process.

Aussie Firebug: Absolutely, so what is the fifty percent international? Do you pick the stocks or are you an ETF investor, I can’t remember on your side if you’ve said it either or…

Pat: Yeah, I’m mostly ETFs and then I kind of have a few Australian stocks which I bought, I’d say kind of not stupidly but against all my better judgment.

Aussie Firebug: I have, I told you that’s safer.

Pat: Well some of those turned out great others they just kind of posting along not doing much so I think all in all if you take all of those stuff that I’ve bought together they kind of just equaling what I get out of my ETFs so yeah, it’s like…

Aussie Firebug: You know, I did the ETF thing as well but you know I think it’s you know, whatever you are comfortable with like it’s whatever blend of shares you’re comfortable with and even I’ve seen some people you know pick and choose their own shares but they sort of stick with the you know, the bigger companies, and companies that are in the ETFs anyway, so really there really is no right or wrong answer, whatever makes you sleep at night really but yeah, you know, if you know what you’re doing and you think you know you can make a good judgement call like you know, I don’t see why not. What ETF, what Australian ETF are you invested in? Venga?

Pat: Yeah, Venga VAS. Yeah, that’s it, that’s my…

Aussie Firebug: I’ve seen that, yeah. That’s a, it’s a common choice you know, you’re like you’re talking about management fee it’s probably hard to, I don’t know if anyone is offering that point zero zero or point zero four percent of the you know, measurement fee out there.

Pat: Yeah, the Australian is point one four I think. It’s the US one that gets that ultra-point zero four.

Aussie Firebug: These two, yeah sorry you are correct, it’s the VTS is the point zero four. Yeah that’s right, still…

Pat: Unbelievable like point zero four

Aussie Firebug: I know that’s just insane. What about the international. You are in cheers or you are going for ETF’s s as well for international?

Pat: Definitely ETF and again VTS is what is at the moment. I am kind of hoping to get into other international ETFs but just kind of cruising at the moment and seeing what my next purchase would be

Aussie Firebug: I mean VTS as well I do like every month. I just go by whatever ratio is you know whatever split is out of my three funds split and I just top up that one. I just do that. But I‘m sort of not of hoping like if the Australian dollar was to decline any further which some people are predicting that it is coming to 90 cents I would go and start leaning towards buying some VTS just because of the fact that it is unhitched against the Australian dollar like if you look at the returns if you had put in some money in 2012 and was parity or was just a little bit over its such a good opportunity that I’ll know what to do for next time you know it gets me that I will I be buying a whole bunch so that when it comes back it is like boom you get that unhitched bonus.

Pat: If you bought US VTS security in 2012 you would be doing very well right now.

Aussie Firebug: Yeah that’s just so good. I lost. Next time you know now that we know we will be prepared for next time.

Pat: Exactly. Back in 2012 I was spending most of my money travelling so

Aussie Firebug: Right, I spend like… I actually went to the states. Can you believe it? It was a once in a life time trip but we spent I am not kidding if you like this is before I truly discovered financial independence. I spent like a good 18 grand or something and I converted it to US it was like a 2months trip but I bought so many things because I knew a whole year that if I was going to buy this wait until I will go to America because it is going to be cheaper. I went to New York and I spend like 4 grand in New York I bought laptops…I got watches clothes everything. I had been holding out for a whole year but because each stand was so good I got all these electronics and everything was so much cheaper I really cleaned up but I thought if I just kept $1000 currency and converted I could have made some money of that but you know you live once I guess

Pat: Exactly

Aussie Firebug: I was going through your blog and you had another interesting article which also I would link into the show notes. You are not a huge fun of Super.

Pat: Not at all. The reason for that is mistrust of government policy over my lifetimes so I am 29 now and before I can access my Super I am looking at something like 30 years or a bit more than 30 years. I just don’t trust that the government will keep all rules the same so that I can access my Super when I want to and cant access it in the same way that people can right now. I much prefer to invest outside of Super.

Aussie Firebug: I don’t add anything extra to Super which I am guessing you are not adding anything extra either so your main fear is that if you start adding extra to super because super can play an important role in early retirement if everything holds up the way it is now but your main concern is that the government with the meddling fingers, you know they have a history of meddling where they shouldn’t be they might change something and you might not have access to it. Is that your main worry?

Pat: Yeah. Essentially and it is not just not having access to it it’s just having access in different sort of ways and what happens to the money when I die, or my beneficiaries die and all those sort of little questions and all those sort rules that can change over the next 30 years.

Aussie Firebug: Do you think that if you are approaching the preservation age there is that much change. Like if you are three years out of the preservation age and you might start to follow some money into super just for those juicy tax savings.

Pat: Well yeah, exactly. As I approach preservation age there is obviously the risk of changes. it completely diminishes as you get closer and closer and so I am not sure exactly when the tipping point will be for me but I imagine somewhere like 10 years before I reach my preservation age I would start to think well it is only two more different governments and two more governments changes before I can access my super so maybe I will just contribute a little bit more now

Aussie Firebug: Sure. There is a few people that I have spoken to on the phone that have the similar mentality as you that they don’t trust the government and that they would rather keep it sort of on the fence. I am on the fence. I am building up my profile on super I am not contributing any extra bit I don’t know if I will because I made a little calculator that sort of you know that calculates how much you need for super how much is inside super to have the quickest way to financial independence in Australia is a two phase system if everything stays the same. Right now you need sort me on the outside you need to sort me on the inside super but when push comes to shove I am not sure if I will actually contribute to super or not so I am on the fence about that. When we are talking like I would need to shave off an extra year or something… is an extra year really that bad to guarantee financial independence. I don’t know, that’s a bridge I will cross when I get to it I guess. You are in Sydney right now aren’t you?

Pat: Yeah I am in Sydney.

Aussie Firebug: You are currently renting with your partner is that right

Pat: Yeah that is correct and we are renting in a sort of share apartment so we live with someone else at the moment and I am kind of a big proponent of share accommodation in these really expensive capital cities so me and my partner practice what we preach in terms of that article and we are sharing.

Aussie Firebug: Awesome. I have also done sharing before as well even in the country where rent is a little cheap but still it half’s your bills so I am definitely a believer in that also. Sorry I am coming to an article which I don’t remember when I read it but you are not very keen on Sydney’s property market which I think is quite understandable it a big crisis at the moment. Do you ever see yourself buying a house in Sydney? You are from Sydney originally like your friends and family are all in Sydney

Pat: Yeah all my friends and family are in Sydney and I was born here and to answer your question I don’t see myself buying a property anywhere in or around Sydney at all, ever. I think I… it’s a little bit more expensive it depends on what you consider Sydney but perhaps go up to the central coast or down to sort of Wollongong area and buy a property there but those are place which I don’t even consider to be Sydney any more. They are places you can even drive to and fro, you spend a day there you might even sleep there because driving back would be too much of an imposition on your body

Aussie Firebug: Yeah so are you planning to retire in Sydney. My question is that are you planning to rent forever?

Pat: No I do want to own a property I have sort of been considering my options. I am not sure exactly where I will retire and obviously a lot of it has to deal with my girlfriend as well where she wants to live and what she is comfortable with but I considered sort of Presbenerio or Sunshine Coasts I haven’t looked too far into it but buying a property is certainly one of my sort of long term aspirations.

Aussie Firebug: Is your partner from Sydney as well

Pat: No, she is from Wollongong actually and yeah she’s moved up to Sydney for work because there is a not a lot of work in her field down in Wollongong.

Aussie Firebug: How is she taking all these financial independence business? Is she on board with it at all?

Pat: Yeah she is actually and I am kind of surprised may be a little bit surprised by it to be honest but she is yeah very supportive right from the beginning and she has a very big part to play in all of my blog posts. When I write something it’s sort of a grammatical mess and verb errors and tense errors and all sorts of stuff but she comes in and cleans up every post after I have written it and it’s been really great

Aussie Firebug: Do you know I had the same deal going on with Mrs. Firebag but she got sick of it towards the end so, I even had a radar that was doing for me which was cool but I had to like every time I did a post I didn’t have to wait for her to log in and check in I always do it myself now and there is heaps of errors but I don’t particularly care about that much.

Pat: Sometimes I feel the same way. Just get them out just don’t worry

Aussie Firebug: Why don’t you take us back to the moment like was there a conversation you had with her explaining what you were trying to achieve and what you envisioned your life to be when you reached financial independence. How did that go?

Pat: This is kind of really awful not because the conversation was hard or anything but I had never did really discussed it with her before I started my blog and I kind of just sprung the blog on her.

Aussie Firebug: Ooh well.

Pat: That’s kind of how she found out.

Aussie Firebug: So you just wrote in a blog post one day and she said what are you doing and you just dropped it on her?

Pat: Yeah, my first blog I don’t know. I was a bit embarrassed to be honest or so unconscious about writing my own blog it’s not something I ever imagined myself doing years ago or when I was a child or anything so when I wrote that first blog post I kind of brought it to her and I was like hey, I have started a blog do you want to read it. That’s when she kind of really found out.

Aussie Firebug: What did she say? How did that conversation go you know? Perhaps like I have seen that you want to retire early and we are not going to be saving for the next ten years does this mean that we are not going to eat. How did that go? I am sure she had 100 questions

Pat: She did have 100 questions but she didn’t ask them straight away she kind of let them on slowly and I think at the very beginning she was just very supportive and really happy and she thought right well I have really missed blog. She thought that was pretty cool and so she was really happy to begin with. Little later on we started feeling out those sorts of issues. Well do we eat out anymore, how much we eat out what we spend our money on? Writing the blog has just been great and getting my thoughts out and her having to read every single one. It is aided in our communication a whole lot and every time I write something new she gets another little insight to how I am thinking about these things but yeah she is enjoying it. To be honest I think I asked her about it one day and she said you know what Pat, not much has changed whatsoever to be honest we spend a little less on eating out and we just think about what we are spending our money on and that’s about it. Otherwise we still enjoy ourselves, we still get out, to be honest we probably even spend more time together now, we do things that we enjoy even more and yeah. I can’t say there have been any negatives whatsoever.

Aussie Firebug: Yeah I know. It’s really funny some people you know, I don’t know if you’ve had to explain to people what you’re doing but if I’ve ever had to explain that you know, some people what I’m doing it, yet still, they are like what so you know you’re going to live you know, on nothing live like a peasant for 10 years and then just live like a peasant for the rest of your life. They’re like, “Nah, it’s not that, it’s not like that.” It’s just like you know the new offering that’s like you know $1800, like when you start caring about that crap, like we happy to use like running out of phone, we don’t need to go out you know three or four times a week, buying clothes isn’t like a huge deal for us. I think heaps of consumer bullshit can be carrier and it can half your bill and then you sort of get to a level where if you’re cutting any more of your spending, then it sort of is impacting your life a bit, like way more than the first 50% you can get. And that sort of way out I mean my partner you know I was at the extreme level for a year or so then, I was a bit too extreme. And she sort of levels me at a bit so we lived a crime life. Like we go out when we want to go out, she buys new shoes if she wants to buy new shoes but there’s always, like she’s very responsible. She was responsible even before she met me and I always have like a little rule you know, we’re going to make sure I like it, I never impulse buy anything, I like think of it before, a few days and if I still want to buy, I just buy. We’re just conscious, we’re conscious of how much we spend and that’s really a bad it, like that’s not even like, we are not like starving ourselves, like some people think. It’s nothing like that.

Pat: It’s really funny like depending on how much you rated stuff sort of read my blog or if you haven’t read it at all yet, you kind of see a general theme of me just trying to explain or trying to express my thoughts that, wait a minute, like, we’re living in Australia where we’re living like these extraordinarily, like rich and opulent lifestyle compared to the rest of the world and compared to history. Like I mean I never go hungry I’m out you know, the other weekend I was at a friend’s party, we’re having a barbeque, I was drinking a nice cold beer, I was socializing and I’m like this whole nut costed me like five to $10 like I’m living like this really fun really comfortable really kind of beautiful Australian life, which is just extraordinarily sort of rich. Any sort of standards that you can make other than just comparing yourself to sort of other ultra-consumers first world country citizens of the year 2017 or the early 2000s, whatever you want to say.

Aussie Firebug: Yeah100% agree even the fact that if you live in Australia that puts you in like the top five percent wealthiest person in the world straight away without even doing anything or just the fact that you are in Australia that even on the minimum wage you are richer than majority of people on the planet. Yet people still complain.

Pat: That’s right and what you said by the way kind of confuses you are like wow you are being like really like a pervert if you are denying yourself of these pleasures and well actually no. Like you said everything I want and more I’ve just like cut away all the bullshit that doesn’t matter and that’s the key. Finding out like really finding out what matters and what doesn’t and when you start cutting away you figure out very quickly that all of this other shit like this external consumer gloss it just doesn’t matter and none of it makes you happier none of it improves your life and any sort of discernable way at all and once you start cutting away all that shit and you kind of de-clutter your life and you really de-clutter you remind and you start living I’d say a much better life because you are focusing on the things that do matter . you are going out for walks you are focusing on your works you are focusing on your relationships and instead of like every week and going to the shopping center and just buying the newest brand name in clothing because you have to look in front of your friends the next time you see them you are going out with your mates and you are kind of both look like buns but you are both running around the bay and you are both happy and yeah it’s amazing when you just cut away all that crap. How much better things become.

Aussie Firebug: Preach, preach it Patty Artist 100% truth you are right there. A minute of truth just dawns you just drop. There is a really cool view, Mr. Money Muztag. I think he was in it. He was talking about it like what makes us happy because at the end of the day I don’t care what you are doing it’s all about happiness. You enjoy being happy 24/7. Everything you do is to be happier even if you have given up your dome, or you are donating money or you are helping other people that is a side effect releasing dolphins and making you feel better about yourself which is a by-product of happiness. Right and Mr. Money Muztag has this video and it’s like the secret to happiness is being there is no secret it’s been here for years. There are certain things that the human being needs like shelter, food, security everything like that like basic human in needs. If you live in Australia odds are you know you are unfortunately harmless or something bad has happened to you. Once you got every basic thing a human being needs covered like at a basic level, you are being fed, you got a house a roof over your head so that beyond that is like a few other things that is needed to make a human being happy like creating relationships and family things like that physical fitness is a big one I mean that’s it, you know what I mean. There was no other, there was no apple mac book back in the stone age but people were surely happy but then there are books of people being happy you know like throughout history when there was no these things. That exist today and they didn’t exist then like it’s the same simple things that matter and so many people grow they look beyond and they think if I get that next promotion or if I am on this money suddenly I am going to be happier. Things like that or if I get that new bag it’s going to make me happier. It won’t make you happy you might get some like a rush of happiness but it deteriorates it’s not the new thing anymore. Then you know you flattered with Mac and campaigns that the new bag or the new Wife and suddenly your things crap it’s like just focus on the basic things like what a human being needs at the most basic level is usually all that you need and there is a little pleasure along the way that make you happier or you know I’ve got nowhere to go makes me so happy you know that is a little bit of new technology but very little, there is a few things I love but there is so much of other stuff they want to started to track my spending’s also I don’t really care about that that can go, the next thing you know you have cut out 30% of your spending just like that.

Pat: you really need to link to Mr. Money’s Muztag video. Have you

Aussie Firebug: have you watched the video I am referring

Pat: Oh yeah I’ve watched it probably ten times

Aussie Firebug: Yeah, that’s right that means it’s awesome.

Pat: The way that he sort of articulates those thoughts and the way expresses them just really hits the nail on the head and it’s really hard to disagree with anything he is saying in that video just because I mean his really precise.

Aussie Firebug: Definitely the link to that video like as he said he can articulate it a lot better than I can but it just hit a nerve with me and I am sure he will hit a nerve with a lot of people it’s like just the basic stuff is where we are human beings, we are just an animal on earth and certain things biological can make us happy and all this other crap is marking in you know 21^st century bullshit. With technology advancements it’s now good to have a heater if you feel cold you can turn this heater on and it makes you warm that’s cool. There is so much crap that you just don’t need. We saw that turning off our phones we went off the tangent

Pat: That not off tangent at all I think that’s like really the key to financial independence is finding out what you need and why and what you don’t because all flesh will quickly erode any sort of extra income you get if you let it

Aussie Firebug: I completely agree, absolutely. Why don’t we get back to yourself and on your website there is a goal tracker that sits to the top right of your website and it currently running round about $250000 and how I interpret it is that you need roughly 1.25 million to hit your financial independent number. Is that correct

Pat: Yes. The way I set that target is that I have taken the nominal amounts in ten years’ time to be 1.25 million which is equivalent roughly to 1million and 17 dollars.

Aussie Firebug: Got you. When you reach this number that means that you are financially independent correct

Pat: I think I will actually reach financial independence much sooner that when I hi that number just because I am spending actually far less than the income that that amount of money would produce. I am actually planning for a little bit of lifestyle inflation in terms of the sort of house I want and perhaps a family and that sort of thing.

Aussie Firebug: How much income is that that you planning to get form that at the end

Pat: Todays there was forty thousand a year

Aussie Firebug: That’s for you to be financially independent does that include your partner in that goal.

Pat: It doesn’t actually .it depends on when I think about it. That amount of money is more than enough why believed to sustain me and my partner for the rest of our lives. As I said earlier, a family will need slightly more than, adding my partner into the mix, in my mind and I have discussed with her a couple of times. Looking at around 1.5 or 1.6 million not much more at all

Aussie Firebug: I guess that when you are at that stage the difference is to save one hundred thousand dollars takes years. I mean to save the next one hundred thousand takes less and so on and so on and so on. If you write 1.25 million to add on the next couple of 100000 with the purpose of comparing interest on the markets takes a while in those years and shouldn’t be too far away. Have you got joint finances already or you haven’t tightened this.

Pat: No, we’ve got completely separate finances think they completely try and spare it to each other but as far as bank accounts and investment accounts that is completely separate.

Aussie Firebug: Does she invest herself

Pat: Yes she definitely does. In a lot of ways she is perhaps invested even more impressive way than have because she is five years my junior she is much stronger than I was five years ago.

Aussie Firebug: is that partly due to your nose you are quite fond of her or she is just shown an interest earlier on.

Pat: well she didn’t show interest in investment so much but just in being really good in money manager and not spending all that money and yeah she got a full time job. You know she left University and she had a part job before her bur she never just went out and spend all our money time and I think kind unlike me she just had more money than she could spend in a sort of rational way without kind of feeling completely ridiculous and that’s how I came later on my original couple of 100k. I didn’t really have a goal so can’t spend that much I just spend what I wanted ad then its stopped anything above that was just like what the hell I can’t spend this bloodshed’s that ridiculous I had no desire to.

Aussie Firebug: It is such a bonus isn’t it if your partner good with money, starting of the bar like more and more and it’s just like thank God that I want with someone that was just a reckless spender and that didn’t come out of the woodwork until a few years because I never looked at her bank account at all like the first couple of years when we joined finances last year and sort of like when I say joined finances it just becomes transparent. She has got all separate accounts and I have got mine but I guess the only difference is we invest in the one trust so she will help me out. She would transfer money to me and we will invest together that’s far the only difference but it’s just such a bonus that she wasn’t reckless.

Pat: I think finding someone like that you know isn’t a complete coincidence. Even Stephan told me it’s just my girlfriends name for all of your listeners who don’t know she was originally was attracted to me partly because I wasn’t very materialistic at all and I would just go out and try to shed off a lot of my wealth even though when I met her at least a few months afterwards it was kind of clear that I had quite a lot of money but yeah.. so with you I am sure part of the reason that you were attracted to each other was even if it’s kind of unconscious you are not materialistic you have good money management skills etc. sort of thing

Aussie Firebug: Do you know I have never actually thought about that but it does make sense now that you said it. It maybe subconsciously yes I was attracted to that side and maybe she was as well but yeah maybe that’s what happened. That’s a good sign to think of that I never thought of that one that’s a good one. You said in your blog that you want to retire by 39 and you are 30 still how long, so you are sill 29 now 10 years to go how long do you reckon it’s going to take to get there?

Pat: Since I have had that original target and original post I have gotten a promotion and I have driven my spending down even further and I have really kind of become conscious of everything I am spending I think by the latest calculations me on my own it will take about 6-7 years and if I throw Stephan in to the mix and we’ve that sort of reduced target together which is about 1.5M it will only take us about 5-6 years so yeah it’s been great and getting an extra income obviously helped and we are really driving don those costs it’s just really driving that date forward and it’s so powerful when you can see that date coming forward and you work it all out and you the results of kind of everything you are doing and it’s like yeey I can keep driving these costs down and I can drive my income up in this day. It’s going to be hit even before I realize it.

Aussie Firebug: that’s awesome , from where I am sitting that’s unbelievable and you know for those that are listening in having a partner you might think it might take twice as long, having a partner and you know you have to factor them in as well but it actually doesn’t if they have got a decent enough job. Having a partner could actually save you money because you have got someone else to turn in good money as you are doing even normal money but everything is cut in half like the rent is cut in half , the groceries are cut in half and it’s a lot more efficient living with someone else than having two people living two people living in two separate homes paying two separate rates if you are in the home, two separate gas bills and everything like that it’s a lot more efficient with a partner trust me.

Pat: Yeah two can live almost as keep as one

Aussie Firebug: Absolutely. You can almost do it almost like, yeah there are a few that you are extra but just as is mathematically impossible not to behave as two people as one but it’s very efficient. it’s all surprised like what the hell like huu we are pretty much living off Chris’ pay cheque which is more like the same she was like she is still living off my pay cheque and all those it’s been unbelievable.

Pat: if you don’t have a partner then obviously things are a bit more difficult in terms of reaching that goal but yeah if you do find someone and they are as intense on not working away their entire lives or running that rat rail their entire lives then yeah it just sucks. MI6 is so much better and so much easier. If I could Segway as well

Aussie Firebug: Sure

Pat: Just on topic, I can’t exactly where I read it but perhaps I can find something and link it to. They say something like 70 or the majority of divorces are a result of financial problems and so when your finances are in order and when you’ve got a partner that thinks financially the same as you you’ve kind of eliminated the major cause of most divorces in first world countries so it’s just another way of being financially independent really does drive being happy and yeah that’s sort of quite an important goal for everyone and being happy like we are talking about before with Mr. Money Muztag that it should be the goal of everyone to kind of be as happy as you can and help other people as much as you can and that should make you even happier and that’s just another plus or advantage to kind of achieving this goal.

Aussie Firebug: That’s a really interesting statistic if you could find that article it would make it cross link operative on the show but I have heard that you know that financial stress is a big cause of marriage breaks but I have had that it foes up to 70% but I believe that for sure that like 100% that’s very believable just because I know personally some couples that have gone through hard time because of financial stress, because of arguing about money, because of work related stress, because of they weren’t home enough and wherever and a huge motivation for me to reach financial independence is to have that time back to not worry about money to you know when we eventually have kids to not be even working three days a week would be a drain. I can’t imagine that. Three days a week for ever. I would be happy to do three days a week but eventually I have the option of working null days a week but it is just not in the brain for me to have that option and to achieve that goal and have so much stress lifted off your shoulders so you can go back to what is important in life like we’ve spoken in realities just focus on the important things and just cut off all the rat race bull shit.

Pat: The sort of rat race would steal so much time away from you and even more time than most people realize probably more time than I even realize: going for a full time job ad trying to sort out yout life in these sort of gaps around full time work and as you said get them out of your mind and let them go just having like could you imagine having the kid and actually having the beautiful sort of privilege, the luxury of being able to spend time with your kid which is possibly the saddest thing I have said this whole podcast like so many parents don’t have the luxury of spending time with your children. It’s kind of sad when you think about that but then this goal like just thinking of that sort of thing if I do have children which I do want to eventually just being able to wake up and just not have to race off to work and then get back home when they are tired and they have obviously gone to sleep.

Aussie Firebug: Exactly

Pat: It would be just as you said amazing, just unbelievable. Every day would just be like look I get to spend time with my kids instead of running around and racing around and never seeing them

Aussie Firebug: The saddest thing about being rushing off to work at 4am that’s a fear of mine. I am looking at all these dads working at pretty big office pf 1000 people and there are some people and there are some people working obviously going to work at four I was like are you insane, that’s ludicrous I know like that’s what you do, like if you have a kid you can’t have his time I am like oh my God I definitely … there is no way I will be working full time even if I don’t reach full financial independence when we have a kid I want to work three days a week for sure I have already worked that out so that when I am in my thirties I will be able to take a few days off and if I have to extend my financial date for a couple of more years I don’t care I would work 3 days a week and have that home time and have that sleep time and not sacrifice things, people sacrifice things when money is, whether they need more finances whether they need to work overtime, they need to do this and suddenly they are not going to the gym, they are not doing this, they are not walking the dog, they are not doing the things that make them happy and that is to earn that dollar to be able to live that life and its bad to walk into a thing

Pat: Like you said I have seen this sort of zombie parents who are barely present and that’s just like aah men I hope that doesn’t have to be me one day

Aussie Firebug: Exactly it is a big motivator for me for sure. I know we’ve spoken a little about it before but tell us a little bit about your sweat Part. How long have you been blogging for and what do you hope to achieve with it

Pat: I have been blogging since January this year and in terms of a goal I am not sure really I won’t be creative you know I can get a larger readership but to be honest I am really happy just kind of plugging away writing my blog posts. Some people seem interested a few other people seem quite annoyed at what I write but that \s ok too because it creates a bit of interesting discussion and yeah that’s about I am happy if I don’t get rated for the time being. it does kind of give me a bit of… it is one of this things that I am happy to do right now even though it actually sucks money out of my life to be honest I have definitely spent more just setting up the blog than I will probably make on the blog but just a sort of freedom to create something myself and invest time in something which the primary motivator isn’t just to make a few dollars and has been very empowering and it’s been quite enjoyable and I just have to keep doing that.

Aussie Firebug: Awesome stuff I know with my blog I did it sort of as an accountability thing and making sure my strategies made sense and they weren’t crazy and the response has been awesome like I have had so many people get in contact with me, like solicitors and like seasoned investors that I can meet up with any time and ask questions about and have people critic my strategy and I can have those how are you doing this and you should be doing this and it is awesome and I like passing content and making these podcasts for people to listen to its so much fun and like you said I have put in way more money than I will probably make but it is not about that it is about expressing myself and holding myself accountable really.

Pat: Definitely

Aussie Firebug: So if there is any listeners out there wanting to get in contact with you what’s the best place they can reach you

Pat: The best place is obviously first of all read my website kind of see what I am all about

Aussie Firebug: What is the address to your website?

Pat: its lifelongshuffle.com and I am usually pretty responsive in there and I try to answer every comment personally that is posted and I have obviously the privilege of doing that because I don’t have an extremely huge readership so I can keep up with all the comments that re posted. Otherwise I spend quite a bit of time on the FI Australia edit so if you kind of post there and I find what you posted interesting I will be able to respond to it or you can message me I don’t know is it good my username Pat the shuffler on reddit.

Aussie Firebug: Yeah sure. FI Australia is an awesome phone board I always go there myself. And just the lastly, if you had to give one bit of advice for a new shuffler what would it be

Pat: I think the best thing I could say is that you will learn very quickly just like what we were discussing before how much all that other shit just doesn’t matter. All the consumable shit, all the latest gadgets all the fancy clothes all of the fancy hand bags kind of showing of to your friends. Getting the sort of ritual respect coffee everyday like none of it matters at all and its quickly going to deplete you of all your money and eventually you will deplete all of your happiness as well but that none of that stuff really brings you real happiness and it just takes time away from you to really going to find what brings you really happiness in this world. So the best piece of advice I can give is just start cutting things away that don’t matter and you will quickly realize how much they don’t matter

Aussie Firebug: What’s to live by Part what’s to live by you guys if you have enjoyed this podcast and you want me to make more be sure to drop me a comment and ratings on iTunes just search ozzyfirebag on iTunes and you will find I am also SoundCloud at www.soundcloud.com/aussie-firebug. Show notes of this episode can be found on my website at www.aussiefirebug.com. Pat it’s been an ab solute pleasure of mine thanks for coming on the show.

Pat: No worries thanks for having me mate, I was definitely looking forward to it and I always look forward to your next podcast.

Aussie Firebug: Ok… too kind mate

Pat: Bye buddy.

Aussie Firebug: Hi guys, welcome to another episode of the Aussie Firebug Podcast, the financial independence podcast for Australians where I interview clever people who have already reached are on their way to financial independence. Our guest today is Jayden Vecchio, a director and co-founder of Red & Co., who was awarded the 2016 F.B. AA commercial mortgage broker of the year. You may know Jayden better as the co-host of the very successful Rentvesting Podcast aimed at Gen X and Gen Y property investors. Welcome to the show Jayden.

Jayden: Right, thank you for having me. This is a lot of kind words there.

Aussie Firebug:[Chuckles] Yeah I hope I got everything right and pronounced everything nice–

Jayden: Nailed the pronunciation as well [Laughing]

Aussie Firebug: It’s an Italian last name, is it?

Jayden: Yeah, it means old which I’m not but you know, getting there. [Chuckles]

Aussie Firebug: What part in Australia you from mate?

Jayden: So I’m based in Brisbane in sunny Queensland, it was pretty hot today. And yeah, like you said, I’m the director of Red & Co. so we’re a property and financial services business and also yeah, lucky to co-host the Rentvesting Podcast so it’s similar to what you do like helping people with growing wealth really.

Aussie Firebug: Awesome, awesome stuff. So yes, sunny Brizzy, have you always lived there- grown up there your whole life or?

Jayden: Yes, so I grew up here, went to school here and then lived in Sydney for a couple of years where I think I got first involved in property down there which was obviously a fun way to do early in 2009/10 so when there was that big beautiful chunky first home owners’ grant, that was kind of just before– there was bit of a low off in Sydney when peaks in the market was pretty soft and then yeah, moved back to Brisbane a couple years ago and the family and that sort of stuff.

Aussie Firebug: Let’s dig into that just a little bit further. So you grew up in Brisbane and then you moved to Sydney in when– 2009? 

Jayden: Yeah and sort of– well actually, I moved down, I was with Macquarie bank at the time and my first day in Sydney was like in September 2008 which was fun yeah like literally like–

Aussie Firebug: So when the world was going down.

Jayden: — the first day I was like so happy, had my like little rolly bag, rolled into the office at 9:00 am and the office that was normally bustling and busy and like people on the phones and yelling and screaming, whatever, it was like dead quiet like you could hear a pin drop. Everyone was in a meeting room, myself like trembling like yeah, I’m so excited, it’s my first day at work and basically you know, 400 people got laid off that day in the mortgages department, they shut down their division like it was a crazy time to be in that area but I guess fortunately for me, I was very cheap labor because I was on Brisbane salary living in Sydney and I was pretty much a grad so there was no point making me redundant. I could stay on and do the work of a couple people and the more expensive people that got paid well, they were let go and it was very bit of a baptism of fire thing seeing you know, the highs and lows of property, obviously that was a bit of a tough time especially on the funding side but super interesting time to be around like you know.

Aussie Firebug: So that’s the really interesting to me because Australia didn’t really- well, from my perspective- get affected that much by the GFC so to hear like you know your perspective on that that 400 people were laid off, like that’s– I really didn’t think Australia caught it that hard. And you would have been in the thick of it working at a bank you know, as large as Macquarie is, how close was it to all falling over in Australia?

Jayden: All in the area, so Macquarie at that time got all their funds through securitization so what that means is it’s kind of like what happened in America where they bundle up thousands of mortgages together then they’d sell them to particularly investors who put money in them and they’d pay like a coupon so they pay investors to return their money just for example so effectively, that market stopped overnight because it relied on banks giving loans to each other and investors putting money in these loans and because of all the stuff that happened in America, basically that market was completely stopped so Macquarie being heavily, they were completely funded by securitization, they had no money overnight which meant they had to shut down their team like the money that they had out, they had to sort of work out how they could refinance that and get it back on balance sheet and the bank had to kind of pretty much buy back those loans more or less and there was nothing wrong with them. It wasn’t like in America where we’re giving people loans to someone in a trailer park, [chuckles], it was very different structures there because like you know in Australia, our loans are full recourse so if you take a mortgage out here and you decide you don’t want to pay it back one day, the bank will chase you and they’ll put defaults on you and they’ll make sure you pay it back whereas in America at the time- and I think it’s still a bit the case- you can take out a loan, you can decide one day you don’t want to pay it back and because they don’t recourse people, it’s literally just putting the keys in the mail and sending it back to the bank and leaving the house there. So like very different markets so it obviously wasn’t Armageddon like it was in the States but certainly for Macquarie who relied on those markets, they had no money to give and so they had no point of a mortgages sales team.

Aussie Firebug: Wow! So that’s the subprime like crisis thing, right? Like that was the name of it in the US, the Subprime or whatever–

Jayden: Yeah, in the US, they called it like the Great Depression, not the great depression, the called it different, obviously in Australia we call it the GFC, Global Financial Crisis.

Aussie Firebug: Yeah, but I thought like that there was subprime loans, I’m not an expert in that–

Jayden: Yeah so basically like in the States what they were doing was they were getting like big piles of loans and then basically on… So a bank would have a bunch of trash loans where they might be on– one thing they did a lot in the States were like these honeymoon rates so they might give you like a really cheap rate for three years, you know, it might be 2% but then it resets and it goes like 6% so then your payments go up like four times and then that’s basically– that whole subprime thing, all these rates reset at a similar time where people’s repayments went up and also backed up with the fact that Americans can walk away and say like “Later guys, thanks for the loan but no thanks.”

Aussie Firebug: Isn’t that bizarre?

Jayden: So crazy.

Aussie Firebug: Isn’t that absolutely ludicrous like so do they take a credit here or is their credit rating destroyed if they walk away from a loan? Like surely, there has to be some sort of–

Jayden: It might like affect your credit rating but from what I understand like you could walk away and it’s not like here where like they will chase you, they’ll take anything like your dog, your wife, like your pair of jeans like–

Aussie Firebug: [Chuckles] Hide your kids, hide your wife.

Jayden: Men! Like they won’t stop here whereas there, it sounds like- you know from my understanding- like you just leave the keys, you walk away, it’s the bank’s problem, not yours.

Aussie Firebug: Yeah, I’ve read about that as well but it just seems so bizarre to me that that they would let that happen like you could just roll the dice on anything you take, the riskiest investment ever and–

Jayden: And apparently like a lot of their lending standards were like– they got like a bit pissy on lending standards so they had to like lend a certain amount to different like demographic groups and like– it wasn’t like here where it’s like: well if you can’t afford it, you can’t get a loan. Like literally, the banks now, the way it’s regulated, unless you’re making a certain amount of income, if you’re over a certain age, you can’t get a loan like it can be tough in certain situations but I think fair probably because it’s going to help everyone else whereas they had a certain point for a Latino, for an African American, for whatever it is where you had to sort of sit in those profiles which you’re just like well, that’s crazy like it should just be based on merits not on whatever so yeah, a lot of craziness there and hopefully it doesn’t happen again but we’ll see.

Aussie Firebug: Yeah, fingers crossed mate. So, you’re obviously– well you’re a mortgage broker, you’re a director of Red & Co. so we’ll sort of skip to hear but that’s alright. Let’s go back a bit. So did you study finance at school or how did you get involved with finance? Did you know from an early age you wanted to go in there or?

Jayden: It was also one of those things like I studied business and IT at university, and actually started with IT–

Aussie Firebug: Go for IT!

Jayden: Yeah, mainframe and computer–

Aussie Firebug: Great, great, love it, love it.

Jayden: [Chuckles] But yeah, like sort of got towards the end of uni and I could always– maybe because of my family loved property, liked dealing with that sort of thing so I wanted to get in something property related, enjoyed finance, ended up getting that job from Macquarie and towards in almost like a grad program so that’s sort of how I got into the industry, through grad program, through university and got in that way but I think then I think then it was sort of like the mates that I had in Sydney that were heavily into property that liked it that I would spend Saturdays looking at open homes, going to auctions and just getting a good feel for the market down in Sydney and that’s really sort of what initially got me in and my first investment was down in Sydney in Alexandria, a unit down there.

Aussie Firebug: And so what year is this?

Jayden: Sort of like 2009, so I’d probably been in Sydney like a year or so and that’s when like I didn’t have a huge amount of savings but I was fortunate enough that the 1$4000 first home owners’ grant at that point and you could still get sort of 5% deposit loan so most of my deposit was probably the grant, like a bit of my own savings and managed to get into that property but my intention was always to– you had to live in it for six months to rent it out, to turn it into investment property and really like rentvest which is what it’s called now but I guess it’s what people did in those days– we were like: well, I don’t have to make the repayments myself. You can get tax advantages if I rent out the thing with [00:09:54] and everything else, I’ll just move out, rent it and live with a mate and that’s what I sort of did after six months, lived on a mate’s couch and became a landlord living on a couch. It just kind of worked out really well.

Aussie Firebug: That’s awesome. So what attracted you to property? You mentioned that– did you say your parents were property investors as well or you come from a sort of a family that–

Jayden: Yeah, I think I came from a family of property investors. I think also working in the mortgages team at Macquarie there, you’re kind of surrounded day by day with property and people buying stuff and investing and you just kind of get stuck in it a little bit so I sort of went that way and then the more saw it, the more I liked how it was kind of tangible when you could get across it and you can understand the suburb and you know some of them around and whether or not I was right.

Aussie Firebug: Yeah, and why did the same thing. I used the first time buyer’s grant but I did it originally and it was like close to twenty grand that I got–

Jayden: It was like twenty one, wasn’t it?

Aussie Firebug: Yeah, just over. I know it was like– thinking back now like such a lot of money that the government just gave me to go purchase a house and like yeah, I did the same thing like lived in it for six months but then rented it straight out and like it’s just crazy to think about how many years it would have taken me to save that much money and then you also factor in like I built to get that amount of money so then like stamp duty is nothing when you build a house and yeah so you’ve got to take these advantages when they’re available, right?

Jayden: Well, I reckon the thing that it’s easy to forget so I think mine was like fourteen grand, right, but like to actually earn 14 grand in my job net, you almost need to make 25-30 because then you get taxed and then you know, by the time it gets into your pocket and super comes off and everything else so yeah, I think like if the grants are there and it makes sense so like you’re not just buying property just because someone tells there’s a depreciation on these negative gearing benefits like you actually do the numbers and sit down and you know, the numbers make sense, I think you definitely grab with two hands.

Aussie Firebug: Yeah, so did you buy that investment property with an ultimate goal behind it or you just sort of had a bit of money, you’re working and you wanted to you know, make a smart investment? What was your strategy behind that first investment?

Jayden: So I reckon I was kind of lucky because a good mate of mine who was a director at Macquarie there had like ten or eleven properties at the time so he was kind of like taking me around showing me sort of the places like you know, it was kind of the next suburb along so it was like this Sydney city CBD, this red farm which was like a touch rough at that point, there’s like Alexandria which is kind of in between mascot and it was like the next suburb along that was pretty close the city, near a train line and like going through a bit that gentrification process like it was a bit industrial but still kind of cheap so I think like seeing him, seeing you know, what it’s like to have sort of 10-11-12 properties and just I like the idea of having some positive cash flow really and having someone sort of paying off my mortgage at the end of the day and obviously the tax benefits help as well. So yeah, I think like I went in there thinking that ultimately I wanted to build a portfolio and not have to work every day which you know, it’s like what you do, you know the fire piece, just becoming financially dependent and getting away from that sort of 9-5.

Aussie Firebug: Yeah, now I’m hearing you definitely. I think we spoke a bit about- you know before we started this podcast- like I don’t think anyone goes into property investing without you know, some sort of greater goal other than just owning the property and for a lot of people, it’s that replacing your income that you do. You trade your time for money and your full time job and you know, you imagine yourself one day sitting on top of this portfolio and it’s just working day and night for you and all you have to do is sort of you know, collect the rent every month and pay a few bills here and there and you can be off traveling or do doing whatever you want to do.

Jayden: Man, there’s a good quote. I think it’s Brian Tracy says- or maybe Jim Run- : You could work full time at your job and part time on your business and it’s kind of like that like you’ve got– obviously, your 9-5 pays the bills and it’s important in the short term but really, you’ve got to start building up your own business and you know for me, it was, I guess a property portfolio. For other people, it might be shares or funds, it can be different things but I guess yeah, that’s important to think about as well.

Aussie Firebug: Absolutely like I think– well it depends because– it’s funny because I quite like my job after that heaps of times but I always had in the back of my mind ever since discovered that financial independence was a thing that I’ve got to get there because then I have the choice because I know that I might like it now but I might not always like it and I went through a job change you know, the start of this year where I was in a really great job but then it sort of got a bit meh towards the end there, there was a change of management and I didn’t quite like what was going on so you know, even though it’s great now, it might not always be good and having that financial security knowing that you don’t actually have to go to work every day to survive I just think is you know, a freedom that everyone should experience at one time in their life.

Jayden: Yeah, so true.

Aussie Firebug: So great, so got the first property so did you study in Sydney– did you go to Sydney to study or you got the degree in Brisbane?

Jayden: I just finished in Brisbane and that’s when I sort of like I worked a bit in Brisbane then kind of got transferred down to Sydney. So yeah, like bought that first property, got a taste I was like this is awesome–

Aussie Firebug: And did you say it was cash flow positive?

Jayden: That one wasn’t but that was like the intention and this was when rates were like 6.5, like high 6’s, like the rates were kind of edging up because they obviously thought Australia’s economy was a bit even then. It was a bit weird. So I was actually going the other way. I sort of, like maybe within 12 months of buying that property, I thought I was ready to become like a property mogul so I borrowed a bit of money for my dad, got that property revalued and then bought another unit in Newtown which is sort of the next suburb along from Alexandria for like 330 and then sort of like scraped because the deposit could hardly service it but kind of did it like in a way that– like I can basically just scrape all my money together and even make the repayments. That really stretched me and that being in a time when interest rates were going up got me into like a bit of a pickle because the rates were going up and I’d sort of budgeted based on what the rates were when I got the loan but now it’s going up like it was starting to choke me like it got pretty uncomfortable?

Aussie Firebug: So that’s your third one started to choke you?

Jayden: It’s the second one. So the problem was like–

Aussie Firebug: But you were renting both of them, yeah?

Jayden: Well, so this was the problem. So like I’d rented out one of them, was living with my mate and then the second one that I bought, I thought I’d sort of like renovate and tidy up a bit before I either rent it or sell it so there was like two months basically that I didn’t rent it arm but to be perfectly fair like I didn’t really do my cash flow– I didn’t do any forecasting really so I kind of like backed the envelope like yes it will totally work, I’ll make repayments that’s fine but like in that time, the rates sort of went up by like 0.3% which then impacts across both properties, the rental doesn’t go up, my day to day salary doesn’t go up and so I just got into like a really bad situation where I was pretty much like living on credit cards, had to sell that property like I was in mortgage distress really but you kind of like manage it but it was still like– it was a good lesson in that if you’re going to make any financial decision, you really need to look before you leap and I hadn’t like I’d done my figures kind of like yeah, roughly, the repayments are these, the repayment is going to be that, the rent is going to be this, totally sweet but then as you know, you own a property, there’s insurance, there’s body corporate fees and it’s all different, you know there’s stamps you have to pay, there’s mortgage insurance I had to count the new one, a bunch of stuff that if I’d really probably thought about it- and plus like I was renovating so that would be like a grand for some paint and stuff and then it ended up costing like five which then like that you know hammers you when you’re pretty living a bit fine so–

Aussie Firebug: Especially it’s the guy that’s you know, your second year out of uni in Sydney, like one of the most expensive cities in the world like I’d imagine that the cash flow is you know, sort of limited to begin with. [Chuckles] 

Jayden: I was on like 50 or so– 55 then like so it’s the millionaire’s factory at Macquarie but it’s not like I was on a millionaire salary sort of thing and owning like two properties and only one’s rented like it was pretty tight.

Aussie Firebug: You were doing pretty well though. For someone who’s on 50k living in Sydney with two investment properties, that’s not bad.

Jayden: Yeah, I was pushing a bit but I guess I just hadn’t done my figures right and hadn’t done it right so if you’re going to do this sort of stuff like definitely model your numbers on a worst case scenario because–

Aussie Firebug: Yeah I always factor in a whole 2% rate increase last time I bought a property, that’s what I factored in but it’s actually gone down quite a bit since I bought although Commonwealth bank at the moment are upping their rates and they are upping rates for investors as you well know but that’s another story–

Jayden: Which is actually like interesting– I’ve done it for a couple clients and even some where like it’s not great tax-wise but its almost to the point where you’re paying almost a percent more for interest only as an investor at the moment compared to if you pay principal and interest, like you almost in some cases like a percent below what you’re paying so you can reduce your cost.

Aussie Firebug: Is that actually still for investors though? Can investors just say to the bank: Hey, I want to pay principal and interest and you’ll lower it for me?

Jayden: Yes, like the differential is huge. Like it’s up to a percent. Just because of like APRA and all these other banks and stuff–

Aussie Firebug: I didn’t know that there you go. I might be giving you a call after this podcast because I thought if its investor loan, they like know you’re paying a premium to be a property investor in today’s market which I agree with. I think that’s–  I’m slightly annoyed because I’m paying you know more than other people but I don’t mind it because if they can prevent all like– if that’s what they need to do to stop the crashing from happening, then like that’s what they need to do.

Jayden: Yeah, if it stops silliness, if it keeps the market a bit tempered, it makes sense but only because it’s you and only because there’s a few people, you know a couple hundred or more people listening, there’s a couple ways to get around that so like I said, yeah, like the interest surrounding the principal interest differential can be up to a percent; with some banks it might be 0.3-0.4-0.5 but even as investors pretty big. The other way you can do it with some banks, you can declare it as an unoccupied loan–

Aussie Firebug: Yes, and I actually have one of my investments I never told them it would turn into an investment so…

Jayden: Which tax-wise it doesn’t affect you because it just like the purpose of the loan was to buy an investment property, it’s an investor property that’s cool so that’s a good little life hack that you can use. Some banks will want you to verify no one like a rates notice or something but I think definitely like it’s a good little hack to get around that you can potentially just call up the bank, tell them to change it across and get it done.

Aussie Firebug: There you go. We might have saved my readers thousands of dollars, Jayden.

Jayden: Yeah dude, it’s that simple. Actually so another little life hack which you can do which I do for clients all the time, and you can try the CBA because they’ll do it on the spot. You just say like for example Sun Corp is doing like 3.79% variable for an occupied Payne islands at the moment so depending on interest friendly but you can just call and say like “Hey, I’ve got an offer to refinance, can I speak with your attention team?” And usually like in a phone call you can kind of arm wrestle them depending on how long you’ve had your loan for, you know 0.2-0.3-0.4% in just a phone call or like happy to help out people just to do that with their existing bank. It’s a good way that you don’t necessarily need to refinance because it’s a bit of hassle but you can still save on your rate and really, it’s money in your pocket–

Aussie Firebug: And heads up, heads up massively like if you’ve got a few properties and you know, you got a few hundred thousand dollars you know.

Jayden: Man, even if you’ve got one property like you know 0.1 on a million bucks is $1000, you know $500 a year on 500 grand like that’s your package fee, it’s pretty big. How hard do you have to work for $500 like that’s–

Aussie Firebug: Exactly and that’s so funny to imagine something like that because there was a comment on one of my blog articles the other day and it was like: Isn’t it funny like people, they won’t do stuff sometimes, they’ll be like I can’t be bothered doing that. Like I’ll give an example, we do like you know the credit cards sort of hack that I’ve spoken to you about–

Jayden: Love that by the way.

Aussie Firebug: I have a credit card. I go through a few credit cards you know every single year, I sign up and get the credit card bonus for a few different credit cards and every single dollar I spend, I try to spend on the credit card because if you’re going to spend a dollar, you might as well accrue it on the credit card to get the points and then you know, once you accrue so may thousand points, you start getting cash back rewards or you get cheap flights and you know what not so you might as well use them as long as you pay it back full every single month. So I was commenting on someone like I can’t remember, they said like people won’t do this because they’ll say I can’t be bothered signing up for it and then going through the whole hassle but if you work it out, literally it it’s like you sign up for a form online, the credit card comes in, you might have to go to the bank, I’ve spent no more than a few hours doing this whole credit card thing, right? No more than a few hours in my whole if you add up everything and it’s probably saved me one trip especially when we went overseas and I got the insurance with the credit card. I’m talking like two and a half grand, everything combined; cheap flights, insurance everything. Hell like if you work out how much people get paid per hour for them to earn two and a half grand and that’s after tax so they’ve got to like make three grand, are they seriously telling me they can’t be bothered like doing all this shit but then on the flip side, they can be bothered getting up out of bed, ripping themselves out of a nice warm bed at 7:00 in the morning and going to work for like $35-40 an hour? Do you know what I mean? Isn’t that so funny that mindset is completely like– they’re not willing to do something that’s going to save them a shit load of money that’s only going to take a few hours but it might take a little bit of things they’re not used too, that might be out of their comfort zone but they’ll do the same mundane stuff at their job for [00:25:28] money and they’re happy to do that, well they may not be happy but they do that.

Jayden: Arguing with a mate a little while ago. My whole principle was like you’ve got to sweat the small stuff a bit so he was like: oh, I don’t care about paying that $2 ATM fee, like I prefer to be comfortable. I was kind of a dick, I’m like show me your statement. Anyway we went through it, like he was paying like almost $200 a year just in those fees because like you know you go to a pub, it’s $5, you go to the wrong bank, it’s $2.50, you go to a show like at the movies it’s like $3.50 like it actually adds up and then $200 every ten years is two grand which sounds like something small but two grand here, two grand there, it actually adds up and then with the power of compounding, mate that’s like hundreds– it can really add up over time.

Aussie Firebug: I’ve been to known to run a kilometer to go to an ATM like a Commonwealth Bank ATM, I get teased by all my friends. I just refuse to pay that. Do you know if I’ve ever told this story on the podcast but the biggest like out of everything in my life, the one moment where I had to just cope something that I just couldn’t get out of was at a Boxster in Melbourne, we’re at the strip is and like the best man was like trying to get everyone money to get the guy a lap dance and I was like now worries, cool, but I’ve ran out of money, I need to get some more money out, went to the ATM, right? Yup, like prepare yourself. Guess how much you would think an ATM at a strippers would cost?

Jayden: I reckon like $4 is like almost half a drink so that feels expensive.

Aussie Firebug: Like 4-5 bucks is like your jaws on the floor, right?

Jayden: Yeah, that’s like half a drink so it’s–

Aussie Firebug: Twenty bucks. Twenty dollars.

Jayden: Really? You’re sure you weren’t drunk and it was two dollars?

Aussie Firebug: No, no, no because like it popped up on the screen and I was like– and I said to the guy, “Are you joking?” And he’s like, “It is what it is,” and I’m like, “Can I get a stamp? Can I just go to an ATM?” He’s like, “It’s going to be $25 to get back in,” so I was like uh huh they’ve done that deliberately like so you can’t get a stamp, yeah? Like you’ve got to pay the $25 to get in and I’m like “Mmh, okay.” Like I’m going to have to… like I can’t not do this but this is the last time I’m ever come into your establishment.

Jayden: [Chuckles] we’re done!

Aussie Firebug: Like yeah, so I just like coughed that on the chin and I was just like, oh this had better be the best lap dance ever–

Jayden: He has to be a very happy guy.

Aussie Firebug: Dude, the best man ended up like dropping like $1200 or something in the strip club that night. He was being silly, he was like lap dance for you, lap dance for you, so when I walked out of there you know a couple of hundred dollars like, “Hmm well, Smitty dropped so much more.” 

Jayden: Couldn’t have been that much money, [Chuckles]

Aussie Firebug: Yeah, probably going to be not as bad as him so anyway–

Jayden: Actually so just quickly finish up on that though. I got a sweet card, so not [00:28:27] Macquarie but Macquarie have like a debit card where I reckon their advert is, and I think [00:28:32], they’ll cover any ATM fee in Australia and it works on Apple Pay because I always like used to forget my wallet at the office and just go with my phone, and doesn’t have any fees so check that out because I think that actually cover that.

Aussie Firebug: So Macquarie, I’ll put that on the show notes, Macquarie card…

Jayden: Yes, it’s like a Macquarie debit card. I’m pretty certain, I’ll have to like to check but they cover like– it’s either all the major banks’ ATM fees or its every ATM in Australia. I’ll send you the email afterwards.

Aussie Firebug: There should be no such thing as an ATM fee, I don’t care what they say. It’s just bullshit, like oh, we’ve got to service the ATMs, like piss off. It’s 100% money grab. You know, bring on the bitcoin, I don’t want to hear about banks like I just want to decentralize, bring on the bitcoin and we can be done with your bullshit fees and just hoops that you have to jump through like no, catch you later! Anyway, so, I don’t even know where we were, back on topic. What were we talking about?

Jayden: Uh, we’re in properties, fees.

Aussie Firebug: Sorry, here’s one for you, I don’t know who asked this but I’m curious to know. So, you have the first one, you get the second one, you’re under a bit of stress, the banks probably should’ve like through your application figure that out but anyway, did you sell the second one?

Jayden: Yeah, I had to. So like at the time of application I’ll say, the intention was for both properties to be investment properties so like the banks, there was more income probably on there than what actually happens–

Aussie Firebug: Oh yes they thought you were going to get rents from the get go?

Jayden: Which was definitely my intention the whole time and there was a change of situation for the record obviously but yes, I think that’s kind of where I backed myself into a bit of a corner and then obviously that coupled with the rates going up, with not having a huge or any buffer realistically. Yeah, I had to sell that property unfortunately and lucky for me like the market– it wasn’t stagnant but it was starting to pick up so I–

Aussie Firebug: So when did you buy the second one, 2011?

Jayden: It seems like ten-ish, maybe eleven.

Aussie Firebug: And how quickly did you sell it?

Jayden: Like I reckon I sold it within like a month or two, like it was fairly quick.

Aussie Firebug: That quickly? Shit! I’m guessing the market didn’t recoup your buying cost and selling cost?

Jayden: So like I paid like 330 and I sold for 355 and then we were like oh you yeah you made money but then once you could like stamp duty, what I paid in LMI, yeah like I would have probably lost a bit of money, yeah I wouldn’t have broken even so that was not– but it was more like well, that’s a good way to…

Aussie Firebug: [Chuckles] you had a go, you had a go, didn’t pan out. You had a go and so then what happens then- what do your next move in investing?

Jayden: So then I sort of like took it easy for a bit, moved back to Brisbane, well actually [00:31:38] with my wife and bought a property in Miami on the Gold Coast. So again like that was like definitely one of those worst houses on the best street. It was like four hundred and thirty grand maybe. And this is one where like I will kind of spend thirty grand on it, fix it up and make it good enough to live in and then just live in it for a bit then probably move back to Brisbane eventually but then because we got a bit you know there was like the dreams of like this was going to be a family home and that sort of the stuff from thirty grand we went to spending like a hundred grand. Bit of deal creep there which again like should learnt my lesson the first time and actually budgeted and sort of stuck to a budget which again is not a good lesson where like you can easily just get in love with certain things in a property like I’m going to live in there like what’s spending another hundred dollars on a tap or what’s spending another two hundred dollars on a toilet or that’s right, the floors are only fifty dollars an extra square meter and that stuff just adds up and up and up. So again without properly– like we spent money, it was really beautiful but then around that time is when I wanted to start my own business so that I’ll probably want to get rid of some debt, consolidate and sell off so that one we sold and made back a mega profit like a wouldn’t say it was super lucrative but that was definitely one of those ones where like there was a lot of deal creep in there and I think if we’d stuck to our original budget, probably would have made a lot more money from it. But so like I think like that’s so American– I see it happen all the time, I reckon you would too where you know, if you’re investing in something, you need to remove your emotions and we got a bit emotional like oh it’s going to be the family home, we’re going to make it a bit nicer and buy the extra taps and spend the extra bits in here and we were completely like which wasn’t our objective so if it’s an investment, you need to stay objective like impartial opinion because otherwise you can go from thirty to a hundred grand and spend three times your budget and not end up with the right result.

Aussie Firebug: So all the other numbers isn’t it– like I tell people that all the time anyone that like even like family members and you know I got sisters that ask for advice sometimes, I’m like: if the numbers work then– if everything works on paper and you’re confident and you know you’ve budgeted for a 2% increase and you know all the factors, then pull the trigger for it but if you’re just sort of like on a hunch or like you know, I just I feel as though this suburb is going to like go well, like that’s not really investing, you know what I mean, like you want to do–

Jayden: Oh men! So like I had these like friends of mine, they recently put a property on a contract in a suburb where they’re paying like eighty grand over, probably a hundred grand over the median house price on a house that is below average. And I had to come to confession last week like here’s the comparable, here’s the facts like you’re actually paying over and they were like this is a family home, you don’t understand, we need a backup for [00:34:46] and this is the thing like you can just make the worst decisions if they’re emotional and if you’re not looking at the numbers. You need to like take a deep breath, there’s always another deal, there’s s always another property, there’s always another house, there’s always another investment. You don’t need to– like you’re not going to die if you don’t buy this one so just take a step back, take a deep breath and do the numbers.

Aussie Firebug: A family home, like if you want a family home that’s a little bit different I can understand you forking out some money like if there’s an emotional attachment okay but people need to separate buying a family home to live in to an investment and like I see it happen all the time as well where they try to do both. They try to do the family home but like and it’s going to be a good investment as well and it rarely works. It rarely works that way.

Jayden: Well so I reckon like you’ve heard it all the time like you make your money on the buy so like it doesn’t matter like how long you hold it or how well you do. Like if you’re overpaying by fifty- a hundred thousand dollars, like you’re just never make that back–

Aussie Firebug: You have to wait five years just to get it back, yeah. You’re right, some overpay because it’s their dream home. I’m more comfortable like if you really want it and you got the money and you’re okay, okay well then that’s like you know, go for it then if you really want to pay that much but if you’re buying it for an investment like there is no other– you’re buying it to make money like there is nothing else, it needs to make money. So cut any emotion out of it whatsoever; I like this one because it’s it looks pretty, no, does it make you more money? Like to the sums, is the cash flowing more? Is a predicted growth– have you looked at the population? Is it need public transport? You know, what are the major infrastructure developments going on in the area like that is where you should be looking. You shouldn’t be looking on cosmetic stuff. It’s got nothing to do with that, it’s all about the numbers when it comes to investing. I always get into arguments with people like about this all the time. If you’re buying to lie in, I don’t care about the numbers then. That’s your business and you do whatever you want with your money. But you buy an investment, it should be a 100% about the numbers and don’t try to mix the two because you will probably get a house that you don’t really love and an investment that isn’t really that great, you just get mediocre in both, and you won’t get either one that’s really good.

Jayden: So true.

Aussie Firebug: Let’s talk a bit the Rentvesting Podcast just for a second. So, I love it, listen to it, I listen from out here–

Jayden: Thanks man!

Aussie Firebug: Yeah, I definitely listen to it. I think it’s awesome what you’re doing. It’s probably like I don’t know… I’ve come across the rentvesting podcast even before you know you contacted me to come on air and like it’s– I don’t know too many other Australian podcasts out there that really speak on your financial independence side. I know there is like property chat I think or property talk on iTunes and a few other podcasts but it’s awesome you know, the more the merrier and I think it’s great for the podcast scene in Australia in this space. So just tell us a bit about the name Rentvesting, where did the name come from?

Jayden: Yeah man so it’s kind of like I came to realization early on that like I grew up– I’m assuming your parents might have been similar where they always like well you know, you buy a property, you live in it, you stay in a good job, you pay off your mortgage and then you finally retire at 65–

Aussie Firebug: Yeah, that’s, my life–

Jayden: Yeah, yeah I know it’s like the opposite [00:38:18] like it’s like yeah, you know you’ve got to work in that job, make sure it’s stable, be sensible, you can take you four weeks a year and I’m like that’s shit like it just doesn’t work like–

Aussie Firebug: I think that was every parent in Australia, every person that as born in 1960 says that to their kids.

Jayden: Like everyone says that like having lived in Sydney and seeing like where it was and where it is like it’s crazy expensive and even in Brisbane like if you want a nice house with some land, Melbourne is the same like you’re just further and further out so what’s the fun in living fifty k’s away at a city with a house and a mortgage if you’re aren’t sort of living the life. So the whole rentvesting thing is kind of like whoa, you can still invest, you can still live the life you want, you know, buy what you can afford and live where you want so that’s where it sort of came about. So yeah, like I think investing in property and in different assets is super critical but it doesn’t mean that you need to sacrifice your life to be paying off a mortgage so potentially look at renting or look at reducing some of those overheads so you can invest the surplus elsewhere and you know that might be different asset classes and helps you get into the market quicker and do lots of different things so that’s kind of where it came about and we talk about that, we talk about property in general and it’s similar to what you do like investing and helping the younger people like us because it’s stuff they don’t get taught school unfortunately and it’s stuff that like if you look online, there’s probably like some dubious sources so at least it’s impartial and you know it’s just in the name of education.

Aussie Firebug: Loving your work mate, loving the work and I completely agree like reinvesting is a strategy that me and my partner are currently using you know and like you said you rent where want to live and it makes so much more sense numbers-wise, and I’ll say it again, look at the numbers to rent a capital city like we’re renting in the country and it’s not quite as– like it’s very close renting and buying in the country is almost like on par with each other. It depends obviously where the interest rate goes and how much the house appreciates but it’s almost the same, a little bit cheaper to rentvest but in a capital city, it’d be a no brainer for me like an absolute no brainer. It is so much more cheaper to rent in Melbourne and Sydney than it will be to buy and start paying house repayments. So incredibly cheaper and like being able to sleep at night, being able to like you know, have the freedom to move around. The only reason that me and my partner would buy a house is when kids come on the scene, that’s it, because we want the stability that you’ve got to have with kids, you don’t want to be rooting houses you know every year with kids. At the moment, we’re young, we’ve got no cats, no dogs, you know not that much crap in the house like we’re living carefree a bit you know at the moment like we can bounce around if we chose to and travel and do whatever so owning a house isn’t really on my list of priorities and people always think you’re crazy when you say you know I’m renting so I’m in a pretty good job, I’m 28 now and you know people say like, “Why are you renting, like are you wasting your money?”

Jayden: Yeah there’s this huge stigma which like I reckon like rent money is not dead money because like you’re paying four- five hundred bucks a week but then the landlord is paying for you know, the body corporate, the insurance, all these other rates like it’s still expensive to own a property realistically.

Aussie Firebug: And if you buy a house you’re paying interest anyway so the interest is more than the rent which is true in Melbourne and Sydney, way more in Melbourne and Sydney then like you can’t tell me that rent money is dead money because the same thing can be said of interest, interest money is dead money as well, it’s the same bloody thing so people just don’t see it that way and I don’t know if you get it like when you are investing I don’t know if you still– it sounds like you own the house now but people just like they raise their eyebrow when they hear you’re renting–

Jayden: People definitely do and like I’ve got an eight-month old daughter so like we bought a house not long ago, sort of doing that it purely for stability as well but yeah before that like renting was great, like we were living in an apartment paying it was like say five hundred bucks a week but the mortgage repayments on that would have been eight hundred with like all the other body corporate, it had a pool and stuff like, it was fifteen grand a year like that’s amazing that we’re saving by not owning it and I could own property interstate or other places and diversify–

Aussie Firebug: People always say that as well, they’re like: well, what happens in thirty years and you don’t have a house and you know the person that’s paying more that owns a property, they’re going to own money when the house goes up it’s like yeah, that’s true but if you rentvest and you invest the surplus that you’re currently saving–

Jayden: Exactly, and in that scenario it’s $300 a week that I was saving that I could invest in funds or different things–

Aussie Firebug: Or another house, you can invest in another properties so of the market went up, your investment property went up also but you have that flexibility of not leaving at that one place, you have flexibility to bounce around and you know do whatever you want to do as a young person. So now, I’m all about that life, rentvesting is awesome. I actually wrote a post about it, I can put it in the show notes for people, big fan, big fan of that definitely.

Jayden: That’s right.

Aussie Firebug: Just before we move on, we didn’t get to the end. So you said you sold the other property, you had the one property. Please tell me that you were a part of the city property burn that happened between–

Jayden: Men! No, complete amateur.

Aussie Firebug: Don’t tell you missed out on it completely.

Jayden: Like so I bought my first property for like 330-is as well, it was around the same price point and I sold it for like 420 a couple of years later so like I made a bit of money but like it recently sold for like 600 grand so I like I think that’s where I got kind of– because I was starting my businesses, I was probably trying to be a bit conservative and probably should’ve expected it a bit more but yeah I think like that’s probably good: learning that property is long term asset–

Aussie Firebug: Seven to ten years, seven to ten years.

Jayden: Yeah, didn’t own it for that long, could’ve held it a bit longer, could’ve used fixed rates and probably other instruments to help like give myself a bit more stability but yeah like didn’t lose money but probably didn’t make as much as so could have but again, a good lesson I guess to the listeners out there.

Aussie Firebug: Well, like no one is predicting that anyway, you know you’d have to be a master analyst to see that burn coming, but oh well. You know, I can’t dwell like everyone could’ve bought bitcoins when they were ten cents and be millionaires by now so you can’t be too hard on yourself so that’s it so you sold the original one you bought and then now it’s just you know, you’re focusing on your business, are you?

Jayden: Yes, I’ve got five properties at the moment so I’ve sort of recouped a bit over the last years which has been cool so I’ve been involved in a couple of different small development projects. I like looking at adding value that way and just sort of format with those in Brisbane, there’s been a bit of rezoning so effectively they say like in Old Queensland like 800 square meters, they now should build three townhouses behind that Queensland or a couple of units behind that Queensland and then selling some and keeping some more just to keep the debt at probably like a sensible level.

Aussie Firebug: Yeah, yeah gotcha.

Jayden: So if I could keep everything now I would but it’s just more keeping the debt manageable because I don’t want to get back in that 2009/2010 situation where using my oven to heat my apartment which was kind of– [Chuckles]

Aussie Firebug: [Chuckles] Yeah well, you know, you can tell your kids that, daddy used to heat the apartment using the oven, that’s what he went through to give you this life. So are they all in Brisbane or you got joints all over the country or?

Jayden: Yes, so they’re all in Brisbane now so I sold it the two apartments in Sydney, sort of subsequent I sold the place on the Gold Coast so all this stuff is in Brisbane because I kind of really intimately understand the area, I know what’s going on there and get, and I still think like stuff in Brisbane is still fairly cheap compared to Sydney and Melbourne, I think I’ll still look at buying into sate, just it feels at the moment for what I’m looking for, Brisbane probably makes sense, yeah.

Aussie Firebug: Now, on your rentvesting website, you say you know the podcast unpacks the facts behind the property market, explains what’s really going on and where the market is heading. So being a property investor yourself with five properties at the moment, you bought another two, that’s seven that I’m counting so far if my math is correct, you got a bit of experience- dare I say- in the property market up in Breezy and you’re also director of a– it’s not just mortgage brokers but you can go into what Red & Co.  does in a second but I want to hear your opinion on the Brisbane market and then where you think you know, stuff is going in Australian general so if you were investing in property today, what would you be doing?

Jayden: Yeah, so I think like what you hear in the media, there’s a lot of hype so if you listen to– if you’re investing in shares and listen to what’s in the media, you probably want to jump off a bridge every other day and it’s similar in property; there’s always a bad report and there’s a good report and there’s a bad report so I think like you need to take an impartial and look at an independent view; what you sort of understand what you get. I think in Brisbane there’s probably certain pockets that are a bit over supplied which you probably read in Sydney and Melbourne and everywhere else and across Australia so if you’re buying an apartment say in Jam side or if you’re buying an apartment in Fortitude valley, like the rentals are getting a bit soft but it’s not devastating so you can still get them rented and you can still buy stuff of value. I think in Brisbane the opportunity probably is buying land so you know, an old house within sort of five to ten k’s to the city for under half a million bucks is possible, probably more sort of under 550 now but that’s where I think the value is in Brisbane so you can look at sort of suburbs in 10 K range, circle $550000 and those suckers will rent out sort of $500 dollars a week quite comfortably and you might buy six or seven hundred square meters for a block so I think that’s where there’s huge value in Brisbane because it’s still quite cheap here. Sydney and Melbourne, yeah they’re doing their own things I think and parts of a different different kettle of fish but yeah, I still think there’s this huge value and huge opportunity investing here but you just need to get a feel for potentially you know, if you’re going to look at investing, you’re from interstate, come and have a look, I’d be probably be wary of people selling stuff, [00:49:54] that sort of stuff, you know, do your own research, get your independent advice and make sure you’re making the right decisions.

Aussie Firebug: I know this is a pretty blanket statement, it’s very hard to sort of answer a bit: you deal with a lot of people getting loans for different properties and what not, commercial I’ve seen as well on the website, what do you think of the current state of Australia’s lending practices and where we’re at with the you know the bank’s loans and everything like that? Do you think we’re on the brink of a crash or I just wanted to hear your opinions on that?

Jayden: No so I reckon like the banks are still too conservative for there to be some crazy at US crash so like unless unemployment went to some crazy levels and people literally couldn’t afford their loans, I think in general the practice is a pretty prudent here because the banks you got to remember if you applied for a loan today although you might be paying say 4% on your interest rate or in the three’s potentially, the banks are more willing than based off 7.5% interest rates and on principle interest payments of 25 years so where you might be paying two grand a month now, they’re actually modeling it based on assuming your payments are at four and a half or five grand so they are a fairly conservative compared to in the States and previous practices. I think like it probably like would have to be a whole loan not going to fix like if there was a global recession it might have a knock on the [00:51:29] because it might affect you know exports and like there would have to be a whole lot of things to happen for that to occur. I think in general like if the US economy and the Eurozone still keep chugging along slowly and slowly, I couldn’t see there being a huge correctional, you know the bottom falling out of property also because it still fairly tightly held property here. There’s not a huge amount supply broadly speaking like there might be certain pockets of it but they’re still getting rented out and soaked up so it doesn’t feel like it’s going to be completely catastrophic. You know there might be areas in Sydney and Melbourne where they’ve had 100% growth over the last 5-6-7 years. If that comes of 10 or 15 percent, that shouldn’t be devastating because it’s come off such a high growth–

Aussie Firebug: Yeah, it’s gone back to them like you were just saying that it’s–

Jayden: Yeah just normal so I think like people that are saying it’s all doom and gloom, I think they always like I remember– what was his name? Steven King when I was in Sydney in 2009/2010 he was prophesying that the Sydney property market was going to fall out, he was an economists, you can still look him up, he’s a huge doom’s day guy, Steven King.

Aussie Firebug: Steven King, I’ll put it in the show notes.

Jayden: Yeah like he was saying back then the Sydney property market was going to crash and he actually sold his family home and then subsequent to that his family who would have gone up 100% in value and he probably could have retired and now he’s still like on Fox news and that sort of stuff so–

Aussie Firebug: It’s just so hard when I hear these people are– I don’t know what’s going to happen over– I’m the first one to say, I don’t know and I don’t actually think anyone knows what’s going to happen but all you can do is control what’s happening right now and make decisions based on the now and if something happens in the future, you try to mitigate the risk as best as you can but I just I think it’s crazy you know people trying to time the markets and you see it all the time like on the forums you know. Everyone preaches like don’t try to time the market! Don’t try to time the market but then you see everyone writing about like you should sell your property because it’s going to blow up, like that’s timing the market, stop trying to do that! Buy within your means now and then if something devastating happens well then you try to deal with whatever happens. Don’t buy beyond your means. Do your figures, do you numbers and if it looks good now, I would buy now.

Jayden: Yeah, have a buffer and then you know, if you can afford it now, if you can afford it with plus 2%, then you’re fine like you can ride that out. It’s like any market. It doesn’t matter if it’s shares, bitcoin, property; it’s all cycles. It goes up, it goes down like that’s just the nature of the market.

Aussie Firebug: Exactly, and you only lose if you sell when you’re down. You [00:54:25] lose any money, but it could crash to zero and if you notice how you start losing your money, you just have to wait till it goes back up because even everyone points to Japan, it’s been going down 20 years. Well, it’s creeping back up. I’m not saying that you want to be in that situation but I’m just– you only lose if you sell, that’s the point I try to make to a lot of people.

Jayden: Yeah.

Aussie Firebug: Anyway, Red & Co., why don’t you tell us a bit about that before we wrap up this broadcast?

Jayden: Yeah, so we’re a property services business so we’re a bit different in that we do like I’d say finance, look at the residential and commercial side, we do rental management sales so that’s cool because it kind of gives our landlords a bit more feedback and they kind of get that side of things. And the sales are just existing properties, it’s not off the plan or that sort of thing and yeah, that’s kind of the business. Help out a lot of investors and first time buyers and first time investors so that’s kind of why I started the Rentvesting podcast because like I said there’s like a lot of trash material out there that wasn’t impartial and I just wanted to sort of clear it up and just wanted to sort of clear it up and help people get a bit of a better education on this stuff because you just don’t learn financial independence at school, you learn to get a big mortgage and try and pay it off so just because the bank’s is going to lend you that money doesn’t mean you should take it.

Aussie Firebug: And what’s the best place that listeners can find yourself and Red & Co., where should they look for these?

Jayden: Yeah, so probably just google Red & Co. or Jayden Veccio or just Rentvesting Podcast, just google that, you’ll find it pretty easy.

Aussie Firebug: I’ll put some links in the show notes. Now, I always try to end with this question: the best advice to give someone at the moment trying to reach financial independence in today’s market?

Jayden: Oh men, I feel the most relevant thing is don’t sell early. [Chuckles] And don’t time the market like it’s just you know, have a plan, stick to it and think the longer term like I saw good thing when I was flying back the other day on becoming Warren Buffet and you know, his whole thing and why he’s done so well is he looks longer term, he sort of looks past the short term, the volatility, you know the five, the ten years, taking 20 or 30 of you and I think it’s the same with any investment. If you try to make money in six months and flip something and do that, like it’s going to be tough but you take the long term view, you won’t lose.

Aussie Firebug: I think that’s good advice, guys. Usually the long term unless you get financial stress or something; if you can hold something long enough like a good asset, usually builds you wealth over the long term. I’m going to wrap up now so you know, if you enjoy this podcast, want me to make more of them, make sure you drop me a comment in writing on iTunes, just search for Aussie Firebug on iTunes and you’ll find me, I’m also on SoundCloud at www.soundcloud.com/aussie-firebug. Show notes of this episode can be found on my website at www.aussiefirebug.com Jayden, it’s been an absolute pleasure mate, thanks for coming on the show.

Jayden: Thanks for having me.