Thanks to the team from Sustainable living for this week’s wealth building strategy: Reducing our environmental footprint to increase our savings rate.
Each week, I have asked a finance blogger or podcaster to share their personal wealth building strategies. I am hoping these will be useful to compare lots of different strategies and perspectives to provide ideas and insight in your own investing journey.
The focus at Sustainable living is saving money and the planet at the same time! By rejecting consumerism, we can all reduce our environmental footprint.
I love the ideas these guys come up with, making it easy for slackers like me to make easily achievable environmental choices, one at a time.
I’m proud to say, due to following this site, the Aussie Doc household had our first (of many) gift wrap free Christmases this year.
Name/ Online identity:
Sustainable Living: The Eco-Friendly and Frugal Path to Financial Independence
“9 to 5” profession:
School teacher & factory worker
Casual Education Consultant: ASIC MoneySmart education program
Online shop: www.sustainablelivingshoponline.com
Adsense and affiliate links on the blog
The odd freelance writing job here and there.
Surveys through Octopus. Here’s my link if you’d like to sign up:
SelfWealth: whilst not strictly a side hustle, it has provided free ASX trades throughout 2020. By using my link to sign up to the online broker with $9.50 trades, you’ll get 5 free trades (and so will I).
I also do election work on weekends when it is available.
Job Spotter (currently ceased during Covid)
What are your investing goals?
Our goal is to reach $1M in index funds to provide an approximate annual income of $40K.
When our superannuation kicks in it will be the icing on top of the cake.
What is your investing time frame? How far along are you?
Well, we are late starters to FIRE and will never be able to retire at 30 years old, as we are both already on the tail end of our 40s and still have two young children at home (the other four are young adults).
We possibly won’t be able to ‘retire early’ depending on how circumstances play out, but we will definitely be absolutely fabulous self-funded retirees.
What the most powerful wealth building tool available to you?
Index funds in the stock market, and capital gains on our PPOR. Apparently, property values in regional Victoria are skyrocketing at the moment.
What wealth building habits are you utilising to reach your goals?
The first thing we did was to examine every household cost and reduce or delete it.
For example, going pre-paid on a cheap phone plan, re-financing our mortgage to a much lower interest rate, re-negotiating our electricity and gas bills, looking for the cheapest insurance quotes, cancelling Netflix and Stan etc.
Reducing our Environmental Footprint
Another thing we did was to stop buying single use items. Plastic disposable razors were replaced with a metal reusable safety razor; cling wrap was swapped for beeswax wraps and containers; paper towel and cleaning wipes were replaced with washable rags; and, many other environmentally friendly and frugal changes were made.
Money Organisation & Improving Financial Knowledge
At the same time we changed over to using the Barefoot Investor personal finance method and decided to live from one wage. The other wage is invested into the stock market every two weeks.
I am also continuously improving my personal finance knowledge by listening to blogs, reading articles and being involved in events such as FinCon.
What is your strategy to achieve this?
This is how we divide our income Barefoot Investor style (one income only):
- 70% Daily Expenses (regular bills, food, fuel, smaller costs, budgeted for gifts)
- 5% each, Splurge (personal do what you want, no questions asked money)
- 10% Fire Extinguisher (unexpected bills)
- 10% Smile (holiday fund – or what it is that makes you smile)
- Mojo: any money over $1,000 in the Fire Extinguisher gets funnelled into Mojo with the aim of reaching at least six months of living expenses
Any extra income from side hustles goes into our shares trading account.
We purchase shares via the dollar cost average strategy. This means that shares are purchased on a regular schedule (for us every two weeks) regardless of whether the stock market is up or down with
the end result of the price paid over time being ‘averaged’.
Although, with the share market dipping so low due to Covid, we were able to repeatedly buy shares at bargain basement prices. These
shares recovered in value and gave a good boost to our portfolio.
We feel our strategy of combining the Barefoot strategies with a high savings rate to invest in shares is a system that works well for us. We still get holidays, some splurge money each, yet also have the reassurance that our bills are budgeted for and any unexpected costs can be managed – as well as saving for retirement.
Were there other strategies before? If so, what made you pivot?
Previously, we realised something had to change as we were both earning a middle class income, yet were living payday to payday. We didn’t have any debt, apart from the mortgage, and we paid our bills on time. Yet, we weren’t getting ahead financially.
Around the same time we were becoming increasingly concerned at the amount of waste our household produced, and the declining sustainability of the environment.
It was then I had an epiphany – by reducing our household waste, we were also saving money and reducing our environmental footprint.
And thus the sustainability journey begun, not just financial sustainability, but also the sustainability of the planet we live on.
Any final suggestions?
By reducing your spending, you’ll not only save money but you’ll also create less environmental waste. And that’s a win for you, your community and the planet Earth.
Cash Hippy & Mr Hack
To see all the wealth building strategies shared with Aussie doc freedom, check out the Ultimate Step by Step guide to Wealth building, with wealth building strategies.
Aussie Doc Freedom is not a financial adviser and does need offer any advise. Information on this website is purely a description of my experiences and learning. Please check with your independent financial adviser or accountant before making any changes.