A New Concept: Die with Zero Review

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

Die with Zero by Bill Perkins

Bill Perkins is an American engineer, hedge fund creator and poker player. He published Die with Zero in 2020.

Who Should Read this Book?

Die with Zero, despite the controversial title, is about squeezing every drop of joy out of life. It turns around traditional financial advice and instead urges readers to loosen the purse strings and make hay while the sun shines.

If you are struggling to get out of consumer debt, or haven’t yet set up a money management system, savings routine and investment plan I would suggest writing this book suggestion down for a few years. The timing of reading this book is very important.

Timing

It was actually perfect timing when I pressed “Buy” on my kindle last month.

We have just finished reviewing our progress after 5 years of getting serious about saving, investing and paying down our mortgage. We’ve made significant progress, and more importantly, have a money management system with saving and investing automated. We are now Coast FI for traditional retirement at age 60, and ahead of schedule for me to be able to retire (if I want to) at 55.

We’re not close to full financial independence yet, but I don’t think we need to be.

I have always only had one foot in the financial independence philosophy. I only plan to retire a little early and may continue with voluntary or other work I love, regardless of pay.

The Financial Advice Gap

But the huge explosion in information, opinions and philosophies produced by the financial independence community in the US and now in Australia, is incredible.

Financial advice is unaffordable for those without many assets to start with. By the time investors have worked out to accumulate a good asset portfolio, most don’t need professional advice. Advice is often biased by hidden incentives and too narrow in its scope. Most financial advisors can only advise on “investment products” not property. Property advisors are largely unregulated.

It is extremely expensive to get good, independent unbiased holistic advice on the whole picture.

Finance bloggers have been helping to bridge the financial advice gap. Blogs also provide a forum for people interested in finance and investing to chat and share ideas. People tend to feel more comfortable without the judgement that can result from showing interest in a taboo topic like money in our “real lives”.

Financial Independence & Die with Zero

Financial independence means something different to everyone. For me, it is as much about getting value for money, squeezing every drop you can from your finite resources. And that’s where Die with Zero and Financial independence meet.

I feel like we have now done most of the heavy lifting with 5 years of focus on finances. We will continue paying down mortgages, auto-investing via Pearler and into superannuation each year.

But the hustle of saving up for investment property deposits is done. We are on track (or ahead) and everything is automated. I feel like we can lift our eyes to the horizons and focus on other priorities whilst our investments continue to compound in the background.

This is why it was a perfect time to read “Die with Zero”.

Why Read Die with Zero?

It is common, particularly amongst the financial independence community to get rather single-minded, one might even say obsessive about saving and investing. It can start to take over, even damage relationships.

It is important to stop regularly and reflect on whether we can squeeze a little more joy from life, along the way. I’m looking at you (and me) type A personality!

Death Bed Regrets

The book spends some time exploring common death bed regrets. After all, if we could look into our own futures and work out what we would regret at the end, it would surely change our behaviour in the present.

Bill Perkins quotes the work of a palliative care nurse Bronnie Ware who has published her own book about the 5 most common death bed regrets:

  1. I wish I’d had the courage to live a life true to myself, not the life others expected of me.
  2. I wish I hadn’t worked so hard.
  3. I wish I’d had the courage to express my feelings.
  4. I wish I had stayed in touch with my friends.
  5. I wish I had let myself be happier.

The author also points out that we too often feel there is all the time in the world to get round to those “one-day” aspirations. By considering one’s own mortality, and acknowledging our time is finite, we tend to pursue those dreams more aggressively and even enjoy everyday experiences more.

What would you do differently if this was your last week, year or decade of health?

You can Have Time, Health and Money, But Not All at the Same Time

Bill points out that most of us start out with plenty of time, hopefully, healthy but very little money. As the decades pass, responsibilities increase, our time disappears and our health falters.

He urges us to maximise these assets at the time. In my 20s I slept in the front seat of a small car backpacking. We had 3 weeks to get up the East coast of Australia, and very little money.

My travel companion and I still giggle about our ridiculous adventure. We had an awesome time, and the absence of luxury didn’t seem to bother us.

I can’t imagine enjoying this same mode of travel/accommodation in my 40s! Unfortunately, I have collected some musculoskeletal injuries that would make the trip very uncomfortable. The good news is, I could afford to stay in hotels and enjoy that little extra luxury nowadays. But I am so glad we took that crazy trip!

The author of Die with Zero prompts us to prioritize the active experiences whilst we are well enough to do it.

Memory Dividends

Bill Perkins points out that spending money on some of these experiences is, in a funny way, a kind of investment. These experiences pay “Memory dividends” for years to come. The earlier we have those experiences in life, the longer we have to enjoy the memory dividends. And things don’t need to be expensive to produce amazing memory dividends.

Contrast my crazy trip driving up the East coast and sleeping rough for 3 weeks in my 20s with the equivalent, in comfortable hotels in my 40s. Which do you think would pay better memory dividends? I have no doubt my travel companion and I would have a great time doing it again in a bit more luxury. But it would never feel as adventurous as the original trip. We wouldn’t have the same experiences as we did in our 20s, or I suspect meet as many people.

Risk Taking

The author rejects the traditional advice to play it safe when leaving school. He points out, if there is a time to take risks, it is when you are young, have few responsibilities and have time to rebuild.

He gives the example of someone with a dream of becoming a professional actor. The young person’s parents may well advise them that the chances of success are slim, and encourage them to follow a more predictable and stable guarantee. But will that young person always live with the regret, and “what ifs” of not pursuing the dream? The author points out that a few years of trying to achieve their acting dream is a small sacrifice to have given it a try, even if they fail.

Prioritise Healthcare

Bill Perkins points out that without health, you have nothing. Money and time spent on health are very wise investments that you will never regret making.

I am 100% on board with this one. Look after yourself, get your teeth checked, eat healthily (most of the time) and exercise regularly. Be proactive with injuries or health symptoms.

As a doctor, I have had the privilege of working in areas with wealthy and poor communities. Money makes a huge, visible difference to health and ability to perform and enjoy activities in your 70s and beyond. The profound differences between the two populations are as a result of better diet, leisure time and exercise as well as proactive healthcare.

Bill Perkins points out that money is best spent on preventative health. He points out spending large amounts of money on healthcare at the end of life (when he implies you are drooling in a nursing home) provides far less bang for your buck.


Planning Your Life

Die with Zero encourages to take a long-term outlook when planning our lives. Instead of just planning the next 1-5 years, the author suggests we should plan our whole lives. His point is that it is easy to miss out on the optimal time for some of those “one-day” experiences you never quite get round to.

He suggests thinking about your life in 5 years “buckets”. Make a list of everything you want to do (and of course, this can change over time). Then work out when the best 5-year time bucket is to do each activity.

I particularly like this idea when planning experiences with kids, partially because I desperately don’t want to miss out on anything with my little ones. We had to time our trip to Lapland (I know, self-indulgent!) before they were too old to believe in Santa.

Small kids love camping. It’s amazing how entertained they can be finding sticks for the fire and exploring beaches for the perfect shells. Apart from our expensive trip to Lapland, most of our holidays while the kids are under 10 have been camping or to visit family.

As they get older, I imagine it will get harder to get them excited about a family holiday! Over the next few years, the perfect time to take our 1st family skiing holiday and to experience theme parks.

Spending during Retirement

The book describes data demonstrating that retirees spend most in the early years of retirement, even despite the challenging cost of healthcare in the US. The author asserts that dying with a full investment account represents wasted opportunities to enjoy oneself.

Bill Perkins encourages to spend our money optimally, with the aim of running down our retirement accounts before death.

What about the Kids?

Instead of leaving an inheritance after death for the kids (usually in their 60s), he suggests giving that cash to them in their 20s and 30s when it can have maximal impact. If your kids have learned to manage money and invest well, they will not need that inheritance in their 60s. Almost everyone would appreciate a hand up in their 20s or 30s as there are so many competing expenses.

Charitable Giving

The author also sees a terrible waste in waiting to donate large amounts of cash to charities with your will. He suggests the charities could have put the money to good use far earlier.

Running out of Money

Bill Perkins suggests a solution to the obvious issue with the book – risk of running out of money before death. This solution is to purchase an annuity so that you have guaranteed income to cover essential expenses as long as you live. With this increased certainty, retirees are more likely to live it up and spend their retirement savings without fear.

The Take Home Message

There are so many uncertainties in life and investing. How could you possibly die with zero? Even the author admits it is impossible to get it perfect. But he does suggest by aiming for zero we will all come a lot close to optimal use of our resources within our lifetime.

The obvious issue is the amount of uncertainty. You could die next year (in which case maybe you would quit work now and travel the world in luxury, using up all your funds). Investment returns could be 5% or 15% over the next 20 years. That makes a big difference to how much you should be spending.

I don’t think the book is supposed to be taken literally though. He challenges our thinking to remind us that life is finite, and we have to make the most of our resources (time, health and money).

Die with Zero is definitely worth a read once you are well on your investment journey, to remind you life is not all about money. Die with Zero regrets.

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  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.

Why I Invest in VGAD – Pros & Cons

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

We have to add an extra disclaimer. I do not claim to be an investing expert. I am a relatively new (excluding super) stock market investor.

Most articles, books and blogs I have read skip over the apparently obvious and claim a certain amount of understanding. For a newbie investor, this is frustrating. It is sometimes difficult to answer “silly questions”. I have struggled through over the past 5 years, working things out as I invested, I simply aim to make this a little easier for those a few years behind me. I do hope it’s helpful. Please feel free to comment below if you have some useful information for beginner investors.

Graduating from Microinvestments to Brokerage Account

On graduating from a micro-investment account to our 1st broker account it was time to choose specific investments. I suspect I’m not the only one who found this a little overwhelming.

We currently own two Australian properties and our principal place of residence (PPOR).

Our total net worth is almost 1/2 in direct Australian property investments, 1/4 in our PPOR and 1/4 in super. This leaves us highly exposed to any adverse events in the Australian property market. As a result, I wanted an investment that had a very weak correlation with Aussie property. International equities fit the bill.

What is Correlation?

Investing in asset classes that weakly (or negatively) correlate with each other is an important part of having a diversified portfolio. When weakly correlated, one class crashes, but the other tends to remain reasonably stable. With negatively correlated assets, one asset class price should increase as the other falls.

It doesn’t seem to be an exact science, as asset classes don’t always act predictably. But it made sense to have assets in classes that were weakly correlated to minimize investing risk.

Choice of Investment

Narrowing down thousands of investment products is not an easy task for a beginner investor.

At present, more than 200 Exchange-traded funds exist on the ASX. And then there are index funds, managed fund managers, LICs and REITs.

The evidence for passive over active investing is convincing, even before considering the fact I don’t really have time to mess about. I already owned an active (but low fee) Australian investment product LIC – AFI, thanks to Scott Pape’s popular advice.

I was looking for a passive international investment.

Why I Chose Vanguard

To keep it simple, I have stuck with Vanguard products. They are the largest, most well known and trusted provider of investment products. I felt confident in purchasing a Vanguard product.

VGAD is an ETF. An ETF investor doesn’t actually own the underlying assets (eg Commonwealth bank shares). Having a trustworthy and reputable product provider is therefore pretty important. I went with the biggest and most trusted name – Vanguard.

Choosing a Vanguard Product

It came down to Vanguard’s international ETF or index fund.

At the time Vanguard “Personal investor” charged a 0.2% premium on their index. Vanguard has since significantly improved VPI. They now don’t charge any additional management or brokerage fees on Vanguard products.

The feature they are still missing (unfortunately) is Automation. If you have to click “buy” every month, there is a large chance you won’t go through with your investment plan. Having this automated so you can (but probably won’t) opt-out is far more likely to see you following the plan.

I could purchase VGAD with the auto-invest with Pearler*, whilst minimizing fees. I remain with Pearler due to their ability to automate my regular investments.

What is VGAD?

Vanguard MSCI International Shares hedged ETF (VGAD) is a global ETF that provides exposure to international companies excluding Australia.

ETFs provide low-cost access to an extensive range of securities and give investors opportunities to participate in international corporations listed outside Australia (like Apple and Google).

Is VGAD an Index fund?

VGAD is an exchange-traded fund that tracks the MSCI (Morgan Stanley Capital International) world excluding Australia index.

Investors in VGAD don’t own the underlying shares, which are held by Vanguard. Any dividends earned on the underlying assets are automatically reinvested, but Vanguard pays dividends for the fund twice per year.

VGAD Diversification

In an international investment, I was looking for a product roughly matching the world stock market cap. The US market cap is around 55%, making VGAD overweight towards to the US.

It excludes the ASX, which is appropriate as I already own Australian investments. Emerging markets are missing from VGAD.

Market allocationFundBenchmark+/- Variance
United States70.7%70.6%0.1%
Japan6.5%6.6%0.1%
United Kingdom4.0%4.0%0.0%
Canada3.3%3.3%0.0%
France3.1%3.2%0.1%
Switzerland2.9%2.9%0.0%
Germany2.5%2.5%0.0%
Netherlands1.4%1.4%0.0%
Sweden1.1%1.0%0.1%
Hong Kong0.8%0.8%0.0%
Denmark0.7%0.7%0.0%
Italy0.7%0.7%0.0%
Spain0.6%0.6%0.0%
Finland0.3%0.3%0.0%
Singapore0.3%0.3%0.0%

There was no “perfect” product that offered exactly what I was looking for at a low enough fee. Vanguard’s diversified funds are a perfectly adequate investment solution, and are the easiest. You simply choose one of the eight funds that best suits your volatility tolerance and investing time horizon.

But I already feel our super is too conservatively invested (even with “aggressive allocation). I didn’t want to invest in bonds/fixed interest/cash outside superannuation. My oversized emergency fund provides me confidence to invest.

Of the International ETFs, there were several global funds but they are actively managed or with fees >0.5%.

It did not have to be perfect. Our portfolio outside super is going to remain far smaller than that inside (largely for tax efficiency). I decided VGAD was “close enough”, and I could later add an emerging markets product if I felt this wasn’t adequately represented by my superannuation allocations.

VGAD Currency Hedging

After a bit more deliberating, I chose an international ETF that was hedged for currency risk.

The currency hedging of a fund aims to minimize the impact of currency variations on investments.

Ideally of course you would want to buy International shares with a strong Australian dollar, and sell when the Australian dollar is weak. If you have no idea which way the Australian dollar is heading (as I don’t) you may want to hedge some or all of your international portfolio.

Hedging usually comes with a small premium on fees. VGAD is 0.03% more expensive than its unhedged counterpart VGS.

Currency hedging should not be confused with a “Hedge fund”. Hedge funds are a complex investment product aimed to maximise return on investment.

VGAD & Ethical Considerations / Sustainability

This investment does not screen its underlying assets for ESG considerations. Vanguard does offer alternative products that do. VESG is an example, charging only 0.18%. They exclude businesses involving fossil fuels, nuclear power, alcohol, tobacco, gambling, weapons, adult entertainment and other controversial activities.

Choosing Based on Management Fee

Once I had worked out the sort of investment product I needed, minimizing management fees was paramount. Fees are the most predictable factor in investment performance. Minimize them ruthlessly!

VGAD charges 0.21% annual management fee.

I Wanted an EFT Domiciled in Australia

I am a busy parent of two, doctor and blogger. I want to minimize the hassle and confusion involved in investing.

This means VGAD is treated as if it is an Australian ETF. It is purchased on the ASX, meaning you don’t need a special international brokerage account.

If you buy an ETF domiciled in the US (like VTSAX), you need to complete a US tax form as well as your Australian tax return. Not a big deal for many, but I would rather cut any extra potential dramas.

ETFs domiciled in Australia (such as VGAD) are treated as purely Australian, which means you can gain international exposure without the hassle.

Dividend Yield & Dividend Reinvestment.

The dividend yield quoted by Vanguard is 1.6%. This is pretty low if you are a dividend investor. But for those, like me, more interested in total return and still in an accumulation phase, minimal dividends reinvested makes sense.

Vanguard do offer a dividend reinvestment plan, via it’s share registry Computershare. Investors will need to pay tax on dividends as if they were income, but the DRP does save on brokerage fees… and temptation to spend.

Holdings

In January 2022, the largest current holdings are:

Apple Inc.AAPLTechnology Hardware, Storage & PeripheraUS4.56669%
Microsoft Corp.MSFTSystems SoftwareUS3.94793%
Amazon.com Inc.AMZNInternet & Direct Marketing RetailUS2.67288%
Tesla Inc.TSLAAutomobile ManufacturersUS1.61306%
Alphabet Inc. Class AGOOGLInteractive Media & ServicesUS1.41391%
Alphabet Inc. Class CGOOGInteractive Media & ServicesUS1.39188%
NVIDIA Corp.NVDASemiconductorsUS1.36728%
Facebook Inc. Class AFBInteractive Media & ServicesUS1.29529%
JPMorgan Chase & Co.JPMDiversified BanksUS0.79316%
Home Depot Inc.HDHome Improvement RetailUS0.70706%
UnitedHealth Group Inc.UNHManaged Health CareUS0.69931%
Johnson & JohnsonJNJPharmaceuticalsUS0.68281%
Berkshire Hathaway Inc. Class BBRK.BMulti-Sector HoldingsUS0.61035%
Nestle SANESNPackaged Foods & MeatsCH0.61014%
Procter & Gamble Co.PGHousehold ProductsUS0.57958%

Performance

We have all heard that past performance does not predict future performance. It is important not to chase last year’s top performer. Mean reversion often results in last years outperformed being next year’s loser! But checking your investment option has had reasonable long term performance is logical.


Month
MonthYTD1 year3 years5 years^Inception
VGAD3.99%23.91%23.91%20.30%14.07%11.89%
Results from Vanguard website December 2021

How do I buy VGAD?

VGAD can be purchased through Vanguard personal investor, where you will avoid brokerage fees but will not (currently) be able to automate.

You can also purchase VGAD through any brokerage, notably automating with Pearler, and earn brokerage credit through friend referrals or minimizing brokeraging by optimizing your investing frequency. Earn a free brokerage credit for Pearler by signing up with my link*.

To set up an account with Pearler or Vanguard personal investor you will need some identification and your tax file number.

Find the VGAD ETF by searching for it’s “ticker” VGAD.

Should I Buy VGAD?

No one will be able to answer this but yourself. Review your goals, objectives, financial situation and obtain independent investment decision advice if required. Whenever purchasing an investment product, read the product disclosure statement.

One thing is for certain. You will never be 100% sure of the ideal investment. I am increasingly convinced that getting started and then sticking to the investment plan is more important than the exact investment choice.

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  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.

M&M: 5 Common Investing Mistakes (and How To Avoid Them)

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

If you have a money mistake you think readers could learn from me please get in touch at Admin@Aussiedocfreedom.com.

This week I have a generous guest post from Kate Campbell, Editor & Host of How To Money. Kate works in the finance industry and as a financial educator at How to Money. In today’s article, she shares 5 common investing mistakes, and how to avoid them.

When it comes to investing, one of the reasons that commonly holds people back from getting started is the fear of making a mistake.

This is understandable given your money is on the line, but something I’d really encourage you to dive deeper on.

Because at the end of the day, I truly believe the biggest mistake you can make is not actually starting at all.

But given we often learn through other peoples mistakes and can gain confidence by understanding all the ways we can go wrong. I wanted to share five common investing mistakes with you today, and how you can avoid them (because we’ve all made at least one of them at some point along our journey).

Investing Mistakes #1: Investing without a plan and decision-making process

One of my biggest suggestions for new investors is to write down a plan of attack before diving in. This gives you direction and keeps you focused. It’s easy to get distracted by every new shiny thing you come across.

I’d also encourage you to write down the reasons you make a particular investment, which you can review over time as you learn more along your journey.

Action Tip: Create a Google Doc to record your investment decisions and outline your investment plan.

Investing Mistakes #2: Investing money that you can’t afford to lose

Are you planning to invest your emergency fund or house deposit? If so, you’re playing with fire (and not the kind we like here in the financial independence community).

Make sure you’re not using any money you might need in the next few years. Otherwise, you might be forced to sell your investments during a market crash because you need the money.

Investing Mistakes #3: Investing in companies and products you don’t understand

Investing already involves risk, so why amplify that by investing in companies and products that you don’t understand?

If you’re planning to buy an ETF, make sure you understand how ETFs are constructed and managed before investing in them. If you’re planning to invest in an individual company, there’s plenty of research you should be doing first. By doing this homework, you’ll be much more comfortable with your investment decisions.

Action Tip: Take the free share and ETF investing courses on Rask Education to make sure you understand the foundations before starting.

Investing Mistakes #4: Investing all your money in one single investment

This is a mistake that investors of any age make (just read some of Scott Pape’s weekly columns), and a mistake that can financially wipe you out.

You might have heard the term diversification already. But if not, it’s the process of spreading your money across different areas (e.g. not putting 100% of your money in a single company).

Kate’s Tip: Spend some time learning about different investment options and ways you can diversify your investment portfolio. Plus, don’t bet the house on any one investment.

Investing Mistakes #5: Investing without keeping records and doing the work

This is a mistake I made starting out that I’d love to help others avoid. Every time you buy and sell an investment or are paid a dividend, you need to keep a record. This will help you down the track when doing your tax return and calculating capital gains/losses on your investments.

Plus, you need to make sure you’re updating the share registries for your investments so you’re getting paid any dividends and receiving key documents. Doing all of this will save you a massive headache at the end of each financial year.

Action Tip: Set up a Google Sheet doc or Sharesight account to track all your investments.

I hope learning more about some of the common investing mistakes and how to overcome them, will give you the boost you need to overcome the biggest investing mistake of all: never starting.

Do check out How to Money and Kate’s Aussie doc article outlining her individual wealth-building strategy here.

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  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.

My 5 Year Plan Complete: Financial Progress since 2017

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

At the end of 2016, our family returned from 6 months travel with our then-toddler and baby. We had extended parental leave to allow us to travel Australia in a camper trailer, on the (dirt) cheap!

Background Before the Five Year Plan was Set

I am a doctor living in a regional town, married with 2 young kids. My financial five year plan began as I achieved my career goal of completing specialist qualifications and getting my 1st consultant post.

Until 2016 we had been pretty responsible with money. We brought far less home than we could afford in 2008 (on a combined income of $110K).

My income was unaffected by the GFC and increased annually. Interest rates also dropped steadily since home purchase until today!

The extra income earned through pay rises went directly into increased mortgage repayments. We never reduced our payments when rates dropped.

Eventually, we were paying double minimum repayments. Increasing them further didn’t seem to provide as much advantage in time to pay off the loan, so we paused further increases.

Here we entered a bit of a drift state. We were doing well with the mortgage and had no idea how to work out if we needed to put extra into superannuation. I liked the idea of investing but didn’t know where to start and didn’t have a lump of cash to start with.

We could generally pay for our reasonably modest lives (for a doctor household) without having to worry. I didn’t always pay off the full credit card every month, but would often use it to smooth spending over the year. For example, paying for a holiday on a credit card, and then paying it off over 2-3 months. Not ideal I know!

We saved cash for both our cars when we needed to replace them. His was second hand (and a complete lemon, costing the same again in repairs). Mine was an ex-demo but only $20,000 and paid out of savings.

As my income jumped with the step up to consultant, we also became parents and I reduced my hours to part-time.

Time to See a Financial Advisor?

With a very good income, and now very grown-up responsibilities, we decided it was time to see a financial advisor.

I made every mistake in the book. I didn’t do any checks and booked in to see one that offered advice without charge.

The advisor-sold us lots of insurance, which as a single high-income household with small kids we definitely needed. But he also convinced me to move my super over to a wrap account with (in retrospect) extortionate fees and PITA paperwork that they needed me to sign every few months.

I was aware I should avoid fees but advisors are excellent salespeople. He was using a lot of finance lingo I sort of understood, and I think I fell foul to the Dunning-Kruger effect. A little knowledge can be very dangerous! He convinced me “you get what you pay for”.

Between work, having and looking after babies, and our trip around Australia, I didn’t have a lot of free time to review the situation.

YOLO

We had long planned to renovate the house, which was poorly laid out and a bit small for our liking.

After years of delaying gratification, I had a huge YOLO moment and suggested to my partner we should travel around Australia and renovate the house at the same time.

The Return to Reality before the Five Year Plan was Set

We returned in December 2016 for our first Christmas in our shiny, renovated at MUCH expense home. As a result of the huge reno, we were now 90% leveraged. We had no savings. The credit card was maxed out.

At the time it didn’t feel as bad as it sounds, I knew it was temporary and there was still regular income, which was about to increase significantly. In retrospect, it was irresponsible pushing this close to the edge!

Financial Situation @start of 2017 (Beginning of 5 Year Plan)

Super ~ Just over a year’s gross salary accumulated between both our accounts

House – 90% leveraged, low-interest rate though

Savings – 0

Investments outside super– 0

Credit card debt ~$5000

Getting Back on Track

Even at the time though, I knew we had to get back on track fast.

With returning to work, my income would receive a massive boost. I wanted to swing back to my financially responsible self and maximise this to get back on track.

I picked up the Barefoot Investor, read it cover to cover and made notes. That night I started reorganising bank accounts, opened a RAIZ account and worked out a fortnightly direct debit we could afford.

I have had an interest in finance, but finance became a new hobby for me over the next few years. I read blogs, books and listened to podcasts.

Long-term Goals – Smart Goals

  • Retirement age 55 financially independent with $2.5M in assets between us
  • Kids education savings – Decided to put enough aside to cover worst case (most expensive) of medical school fees for both kids. if they don’t take part in tertiary education, they can use the money for a house deposit or business start-up.
  • Never work full-time again
  • Increase options/freedom to travel
  • Replace the cars when they need replacing

Five Year Plan – Financial Goals

Long term goals need to be broken down.

I started with a 5-year plan, before breaking them down and identifying annual goals.

5 year goals:

  • Save money in offset to fund an investment property~$600,000
  • Purchase investment property before my 40th birthday in 2020
  • Invest $125 per month towards the children’s tertiary education
  • Get the kids to Lapland!

Plan to Achieve the 5 Year Plan Financial Goals

  1. Increase income whilst improving control over income
  2. Reduce Spending
  3. Save a deposit for an investment property
  4. Research how to invest in property successfully whilst saving
  5. Research Lapland and find out how to do it without going bankrupt!

Five Year Plan: Increasing Income

Although I was returning to a wage well above average household contact, we had a lot of catching up to do! To find out why I decided to invest in property 1st, review my property vs shares article. To meet my goal of purchasing an investment property before 2020, I had to hustle.

Options to Increase Income

-Extra Shifts

Extra shifts are available from time to time at my regular work, but this was unpredictable. I worked overtime shifts when they came up and we didn’t have plans.

-Locum Work

Locum work was the obvious way to increase income dramatically, quickly and reliably. There are loads of rural hospitals all over Australia that are desperate for staff, I happen to really enjoy working in them. By working in different hospitals, I got to experience different patient populations and perform a lot more clinical work than I do in my day job. I find it renews my enjoyment of practising medicine.

Locum doctors also get control over when and where they work. Over the future, increasing the control and flexibility appeals to me.

Being paid in pre-tax dollars for my locum work also meant I could park those dollars in our offset account for up to 21 months, significantly reducing the interest incurred by the mortgage each month. The interest saved could then be used to pay the offset down further.

-Start a Blog

I was considering starting to write a blog to document my transformation from 90% leveraged broke doctor, to a financially responsible wonder woman fully in control of life. Again, the location flexibility of blogging appealed. If I could produce an income blogging (and that was a big if) I could maintain a modest income whilst we travelled further as a family.

But at the time, my 1st priority was getting cash flow in fast. There was no guarantee of producing any income with a blog, and if I did get to produce income it would grow very slowly. The idea of blogging was put on the backbench until 2017.

Five Year Plan: Reduce Spending

We had a chaotic banking system before I read Barefoot, even incurring overdrawn and dishonour fees occasionally.

Barefoot to the rescue. I opened multiple offsets, reorganised my accounts and stopped paying bank fees. Most importantly, my partner and I agreed to separate a set amount each pay to go to our own splurge or fun account.

Next, it was time to look at cutting costs.

The biggest costs for many are housing, transport and groceries. Cuts in these areas can often be the most significant moves. I wasn’t wanting to cut spending on housing, our vehicles are 10 and 20 years old, so already pretty cheap. Grocery spending was reduced by buying things cost-effectively (in bulk and on sale).

I started listening to the Choose FI podcast. It is an American pod, so not all the content is completely relevant to Aussies. But their philosophy resonated with me, and Brad and Jonathon’s enthusiasm has a way of catching on.

One by one I worked through our expenditures, identifying wastage and eliminating as much as I could find. Every time a saving was made, savings were increased by a corresponding amount.

I did find repeating this process twice a year helpful, as I became more comfortable with cutting expenses as my mindset gradually shifted.

Five Year Plan: Save a Deposit for an Investment Property

It may seem a little strange that instead of saving for a house deposit I opened a RAIZ account and set up a direct debit to invest in the stock market.

We are generally advised not to invest in the stock market for less than 7-10 years, and not before saving an emergency fund.

I had a bad case of impatience, and couldn’t wait to get started!

I reasoned the date for property investing wasn’t set in stone. If it had to be delayed because of a market crash it wasn’t the end of the world to me. But in the meantime I could take advantage of market growth (hopefully) and save that property deposit faster.

It was a risky move, and it could (and probably should) have bitten me on the arse. But it didn’t, I got away with it. In fact, I’m such a jammy git I withdrew the whole lot (~40K) days before the COVID crash. Beginners luck! I am definitely becoming more risk-averse as time goes on!

At the same time, we aggressively paid down that pesky credit card debt in our mortgage offset account.

We have been credit card debt free since early 2017, and at the start of 2022 so damn close to fully offset our mortgage I can almost taste that (PPOR) mortgage-free lifestyle (2023?)!

As regular readers are aware, I brought our first investment property in July 2019, 6 months before my self imposed deadline. There was a lot of media doom and gloom at the time, and I was pretty scared I could be making a mistake. Knowing there were no further steps I could take to reduce the risk, I took the plunge.

The property has performed well so far, even before the COVID boom. It has been constantly tenanted (touch wood) and we ended up purchasing a second investment property in 2021.

Five Year Plan: Research how to invest in property successfully whilst saving

I always liked the idea of being a property investor. After learning about stock market volatility, I liked the idea of diversifying retirement income.

I had never taken the plunge before because

  1. Didn’t think we could afford it
  2. I didn’t know where to start and didn’t want to get ripped off.

I read every book on property and investing that I could find and was overwhelmed by all the different approaches.

Thankfully, I was pointed to the Property couch sometime in 2017. I devoured the episodes and felt confident I had found my guide to buying property for investment. Initially, we planned to do it all ourselves to save some money.

But the more I learned, the less I knew! Eventually, I had to admit to myself I needed professional help.

5 Year Plan: Take the Kids to Lapland

This was my Carpe Diem goal. I’m a bit obsessed with my kids and a pretty cheesy mum.

Once it occurred to me I could take them to Lapland, a quick google search later I was hooked on planning. We have family in the UK and had planned to go back to visit, and decided our Lapland adventure could be a great side trip.

Personal goals should be planned around major life changes and events. Kids are small for a limited time frame, and it won’t be too long before they’re too old for certain experiences.

But these are very expensive trips. Holiday companies offer 1 day excursions to Lapland (Rovaniemi, Finland) to reduce the cost as accommodation can be pricey.

We booked bargain flights to Helsinki, where we caught the Santa Claus express overnight train (Oh, yes). I found a charming Airbnb log cottage that belonged in a fairy tale. I hired a car (with snow tires!)

We saw all the sites, met Santa, took an exhilarating sled dog ride, saw reindeer and had so much fun just playing in the snow. We even caught a brief glimpse of the Aurora in the 5 nights we stayed.

It was still expensive, and some parts were absolutely a rip off (like the ice restaurant). But this was an experience of a lifetime and I am absolutely thrilled we did it.

Looking back, the pandemic was beginning in China as we were playing in the snow. I could not have imagined how life could change, and the ability to travel has been lost for so long. I am so glad we did not delay this trip in order to save more money!

Financial Situation @start of 2022 (End of 5 Year Plan)

Super ~ Just under two year’s gross salary accumulated between both our accounts (nearly doubled)

House – 90% offset, even lower interest rate

Savings – equivalent to 18 months spending in offset

Investments outside super– $85,000 between Pearler & kids education funds

Credit card debt ~0 of course

Summary of 5 Year Plan Achievements

It really is impressive how far a strong salary when you stay focused can get you in 5 years. It’s gone pretty quick! We have 90% offset our mortgage from being 90% leveraged. We have invested inside and outside super and purchased two investment properties. Limited ability to spend our money as a result of COVID travel restrictions and intermittent lockdowns have accelerated the progress as well.

What achievements have you got planned over the next five years? Five years is a long enough period to make a huge progress towards your financial goals. Have you written down a five-year plan? What is your Carpe Diem goal? What will be your situation in 5 years – and will you look back at how far you have come with wonder?

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  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.

End of Year Checklist: Review Finances and Celebrate Achievements

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

End of Calendar Year and End of Financial Year are Perfect Time to Review Finances

The end of the years are the perfect times to review progress towards your goals for 2021 and set new plans for the next. Use this checklist to make sure you are on top of your financial goals and take a moment to appreciate achievements from the past year.

Record your Net Worth

Monitoring your net worth can confirm you are moving in the right direction. It is motivating to see progress set out in a spreadsheet or graph, particularly over a few years. I have mine recorded since 2009.

In order to update your net worth, you will need to spend time logging into each of your accounts, including superannuation and possibly estimating the value of properties.

Net Worth = Total Assets – Total Liabilities

The easiest way to monitor this is to record it in an excel document, save it to the cloud.

Review Finances: Income

How much income did you take home this year? If your income has increased, did you direct this extra cash intentionally towards savings, investments or effective spending?

It’s just too easy for this money to disappear without any appreciable increase in life enjoyment. To make sure I use these small incremental increases in income, I correspondingly increase my direct debit towards Pearler* investments.

Review Finances: Expenditures

Time to review your outgoings for the year 2021. You can use an expense tracking app or just download your bank account data and manually categorize it into an excel document. What are your top expenditure categories? Is your spending aligned with your values? Is there still any wasted spending you can identify?

How do you want to adjust spending for 2022?

Review Finances: Tax

I find I don’t find out exactly where I stand until I have received my tax returns, division 293 and excess concessional contributions bills (Apply to income > $250,000 or concessional contributions > $27,500). If you didn’t get chance to review everything at end of financial year, now is the time.

Salary Sacrifice & Salary Packaging

How much tax did you pay this year? Do you need to stop procrastinating and set up salary packaging and salary sacrifice.

Varying Tax Witholding

If you are a great money manager, an employee and own property investments, consider varying your tax withholding. If you are expecting a significant tax return, instead of waiting to receive it at the end of the tax year, you can request your employer withholds less pay each month. You could increase payments into your mortgage offset or into an automated investment.

Review Finances: Charitable Donations

Do you have an intentional giving plan, or are you just randomly donating when the requests come? Are you confident you are donating effectively? Are you happy with the amount or would you like to increase your annual donations next year?

This is such a personal area, but I love the way Effective Altruism explains how and why they think certain charities deploy your dollars with maximum positive impact. Aussie Firebug just interviewed the chairperson and board member of Effective Altruism Australia. You can find the podcast episode here.

Get Mortgage Ready or Review Your Mortgage

It’s sensible to check your credit score every year regardless. But it is especially important if you are planning to purchase a home within the next year. Your score impacts your ability to borrow at all, the limit you are allowed to borrow and the interest rate charged. You want banks to see you as a sure thing.

If you are lucky enough (!) to already have a mortgage, check this annually to make sure you are paying a competitive rate and are utilising an offset if appropriate.

Review Super

You should at least log in to your account and check your super payments have been received. If you haven’t done this in the last 5 years, review whether you are happy with your super fund.

Again, if you haven’t reviewed your investment allocations in the past 5 years it’s time to check-in. Is your asset allocation aggressive enough to hit your goals, whilst conservative enough for your volatility tolerance and age?

Maximise Concessional Contributions

Many younger people are hesitant to put extra into super, due to the risk of changes. This is fair enough, but I don’t think the risk warrants throwing money away.

It would be mad not to meet the criteria to seize any employer super bonus contributions. You may wish to consider salary sacrificing to top super contributions to the full concessional limit (currently $27,500).

You can now catch up on concessional contributions for up to 5 years. If you are expecting to receive a large salary boost within the next 5 years, you may wait until then to maximise concessional contributions.

Review Savings & Investments Outside Super

Reviewing asset allocations every 5 years is appropriate, as performance is inevitably variable over time. A rubbish year in 2021 may be followed by a meteoric year of returns in 2022.

You may need to rebalance your portfolio. If the end of the calendar year is when you have planned to do this, take time to make sure it is done in the most tax-effective way. Selling investments inside super may be a more tax-effective way to rebalance your total investments.

Check Professional Development Funds

If you need to use or lose a professional development allowance each year, twice a year reviews are a practical way to make sure you are on track. Don’t let it go to waste!

Review Insurance

We should all probably review our personal insurance needs every year.

Income protection has become incredibly expensive this year, with routine ~75% increases for those of us with a “level” agreed value policy. The newer policies, with far less favourable terms, are not cheap either.

Review your insurance needs. Think through worst-case scenarios. If each household income earner died, was permanently unable to work or unable to work and needed ongoing care.

Each year considers if you can reduce your insurance, or increase your total permanent disability insurance to provide more affordable cover in case of disaster.

Review Goals for 2021

Did you set financial goals for 2021? Are they written down somewhere? In the chaos of the year, it is easy to forget about your goals. Find them and review them. How much did you achieve? Are the goals still relevant or did circumstances or aspirations change since last year?

What financial goals would you like to set for 2022? They should be based around your broader life goals, rather than arbitrary dollar amounts.

Are you Funding Your Carpe Dium Goal?

Don’t delay gratification forever! What is that “One day” you always plan to do, but never get around to? Write it down. Set a date and work out a plan to make it achievable! If not now, then when?

Life and Finances End of Year Review

Start the new year with a firm plan, based on your goals for living your best life. Spend a little bit of time reviewing your finances. Important financial decisions need regular scrutiny and adjustments to accommodate your changing situation and goals.

Hoping for a fabulous 2022.

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  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.

How to be a Black Belt Awesome Money Manager

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.

Being financially successful begins with learning to manage your money effectively. Trying to invest before you can effectively manage income and outgoings to save regularly is like trying to run before you can walk.

An awesome money manager squeezes every drop of value from each dollar. This allows him to annihalate debts, fund dream (stretch) goals and purchase his most precious resource, time.

We weren’t born with these skills, and very few were taught them as kids. Most of us learned along the way, often through screwing up.

Have you racked up a load of consumer debt on those MUST HAVE items (that you now can’t quite remember)? Have have learned these lessons the painful way, or plan to skip this life lesson by reading about my screw ups instead?

Like most things in life, there are levels of success. How far are you towards black belt money manager status?

White Belt Money Manager

– Know Your Income & Paying Bills

How much cash do you take home per year? Are you paying all your bills without incurring late fees?

Your Mygov account can tell you how much you have earned this year so far. You will also be able to see how much you earned last financial year, along with the tax paid. You should know the yearly amount, and monthly net income.

Managing your money well enough to pay off debts and bills reliably is the first step in financial adulting. If you are not managing, drastic immediate change is needed to avoid a nasty outcome. Ask a family or friend to help you (not with a handout), borrow a copy of Barefoot or contact Financial Counselling Australia.

Yellow Belt Money Managers

– Know Your Net Worth and Which Direction it’s Heading

List all assets and liabilities. Calculate your net worth.

Total assets – liabilities = Net Worth

For Example:

AssetsLiabilities
House worth $700,000Mortgage outstanding $500,000
Superannuation $100,000 
Term Deposit $5,000Credit Card Balance $3,000
  
Total assets = $805,000Total liabilities= $503,000
Net Worth = $302,000

A new graduate is likely to have a negative net worth. But if all that debt is productive (a student loan leading to a good career, mortgage of a good quality property), good financial habits will result in a positive net worth soon.

If the net worth is positive, but the liabilities are depreciating assets (cars, maxed-out credit card), the situation may well get worse without a change in financial habits.

The initial net worth is not that important, but the components, and trends over a few years are. Monitoring your net worth each year can tell you if you are heading in the right direction, and provide some positive reinforcement.

Note that improvements in net worth will initially be pretty small. If you are practising good habits as a money manager, this will increase dramatically over the years so hang in there!

Orange Belt Money Manager

– Understand How Much you are Spending

No judgement. This is probably going to be painful. Many people avoid facing up to their spending for years.

Most of us spend more than we realise, or intend to.

It is important to face the music. There may be forgotten subscriptions and other expenses which provide you no value, that you can cancel without any effect on your lifestyle!

Spend some time looking through your last 3-12 months of bank account statements. Using an excel document or expense tracker, note the different spending categories and your spend in each.

Pocket book is free and a great app for tracking outgoings. It can automatically track your expenses into an appropriate spending category, making it easier to see where you spend, and waste resources. But if you make a lot of ATM cash withdrawals, the type of expense will obviously not be recorded. You will probably need to manually recategorise outgoings to ensure the data is accurate.

There are also some security issues with expense trackers, that can be overcome by manually uploading your banking data instead of sharing log in details.

Manually entering expenses into an excel document for a 3 month period is the most practical for those with only a single account. Those with multiple accounts and credit cards may choose downloading data from each account and uploading into Pocketbook or a similar programme.

Green Belt Money Managers

– Have a Short Term Emergency Fund Saved Up

Financial green belts are in the great position of netting letting their bank account run dry. Having enough cash to get you out of strife in a short-term emergency is a major milestone. The car breaking down is now an annoyance, rather than a crisis.

– Have a Plan for Longer Term Emergencies

At this stage, you also have a plan in case a longer term emergency occurred. If you were out of work for 3 months how would you survive?

This can include insurance, cash savings, a list of expenses you could cancel (but don’t currently want to), even a flybuy points balance that will cover a few weeks food.

There’s few expenses more painful than an insurance policy. You pay these premiums hoping they will be a complete waste of money!

Insure against catastrophe. Life insurance, income protection, house & contents insurance are critical for those with dependents, and many without. Check what insurance you have and whether this is adequate every few years (or with marriage, childbirth).

Reduce costs by increasing excess/waiting period, and hold onto any agreed value insurance product until you don’t need it anymore.

Make sure you notice when you can finally self insure. Once you can cover the cost of the catastrophe you are insuring for (even at a pinch), it is probably time to cancel the insurance.

Blue Belt Money Manager

– Have an Organised Banking System

You should never pay a late, or overdrawn fee. You need to spend some time thinking about a system that will work for you. Here are some options.

Automate all your upcoming bills, credit card payments, everything you can. Setting up direct debits to pay bills is a bit of a pain, but will save time every month for years to come. It will also eliminate the risk of an overdue fee, or black mark on your credit record.

Set up a direct debit with your credit card to pay the full balance every month automatically. If money is too tight to do this without worrying about becoming overdrawn, cut up the credit card, and close the account.

– You are Regularly Saving Money by Spending Less than you Earn

Blue belt financial managers have managed to create a gap between their income and expenses. This gap allows regular savings to occur. This is a huge step, one that many struggle to acheive.

At this stage, you save up for significant Purchases that decline in value over time (tvs, cars, other consumer goods). Delaying gratification, by saving up can build the anticipation and allow us to enjoy the product or experience even more!

Blue belts can resist or delay impulse purchases. Most of us have way too much stuff. A delay (from 48 hours to 30 days) between the urge to purchase and actually punching your card details will help you buy things you really want.

Blue belts also plan ahead for irregular, semi-predictable spending such as replacing old appliances and paying for the car service and tyres.

They are also commited to shopping around for the best deal for purchases, squeezing more value from each dollar. Blue belts bother to get quotes for insurance renewals and avoid the lazy tax whenever they can.

Blue belts don’t let any small increase in income, tax cut or reduction in spending go to waste. That money is diverted to savings automatically. Even tiny increments really add up when you do this every time a little regular cash is freed up.

Find out more about how to save more money.

Purple Belt Money Manager

– Minimize Tax (Legally!)

As you earn more, you will pay a higher proportion of your gross income in tax. I now pay more in tax than all our other annual costs combined! Even a small saving in tax can be enough to fund a regular investment.

If you pay 30% or more in tax, salary sacrifice and package. Utilise spousal super contributions and super splitting if you are part of a couple with unequal incomes.

Get organised for tax time to ensure you claim all deductions.

Think about the tax implications of investments. You shouldnt make your investing decisions based on tax, but if there are two similar options but one provides a tax advantage, this should be your favourite.

Brown Belt Money Manager

– Have Financial Goals & a Written Financial Plan

Brown belts are really thinking long term. Instead of saving up just to spend, these are dreaming up goals and then working out how to acheive them.

What do you want to achieve in the two years, 10 years and during your lifetime?

You need life goals before you can set financial goals around these.

There always seems to be more goals than cash available! Prioritise which are the most important, and make these financial goals. The others can be added back if your financial situation changes. And it often seems to, once you become an elite money manager.

Then make a written financial plan. Start with the long term goals and work backwards. Review it every 5 years, or with major life changes.

Some will need professional, personal financial advice. Take care to choose the financial advice provider carefully. We don’t all have to plan without help, but you have to invest enough time and energy to understand your plan.

Red Belt Money Manager

Buy Assets > Liabilities

You choose what to do with the money coming in. Most people spend their cash on liabilities – cars, boats, Iphones and laptops that lose value from the moment of purchase.

How much money have you directed towards building assets? These increase in value over time, eventually replacing your pay check with passive income.

To be a good money manager you want to start directing income to build assets.

Invest regularly and automatically to improve your ability to stick with the game plan.

Black Belt Money Managers

Black belt money managers have acheived all the above. They regularly save and invest towards written goals in accordance with their written financial plan. Plans are in place in case of catastrophic life events, and an adequate emergency find. They either avoid debt, or only utilise productive investment debt and pay credit cards off in full every month, reaping the benefits of free insurance and frequent flyer miles.

Black belts are thinking ahead by monitoring their credit record in case of future borrowing needs. They will get the best rate and maximum loan as banks know black belts are ultra credit worthy.

Black belts purposely surround themselves with positive influences and role models, either in real life or virtually. It’s not uncommon to be surrounded by people encouraging to blow your cash. People want you to validate their own (often unwise) decisions. It can be isolating to be the only one trying to make smart financial decisions.

These ultra money managers listen to podcasts, read books and subscribe to finance blogs to continue to grow knowledge and find more ways to improve. Finding support through a similarly minded friend, or an online group can help black belts stick to the plan over the years.

Black belts are careful to circle back and make sure they have a good balance between spending and saving for themselves, their spouse and kids. They know what really matters, and that money is just the way to acheive these goals.

Black belt money managers move away from an All or nothing mindset to continual growth. They understand everyone makes slip ups, and the occasional overspend is the not the end of the world.

Ultra money managers are usually keen to pass as many of these skills to their children. By the time these kids leave home that have a far better understanding of finance and money management than we did, and hopefully go on to design and live their ideal life.

Conclusion

Money management is an essential skill, with many levels to acheive. Where are you on the colour belt scale?

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  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.

Money Self Sabotage: How to Get out of Your Own Way

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

Are you struggling to make any positive financial progress?

Reading finance blogs with good intentions, but never actually making the behaviour change? Self-sabotaging behaviour is a common problem with money and in other areas of life.

Identifying your self-sabotaging behaviours, and understanding them can help you overcome financial self-sabotage. Get over that plateau and reboot progress towards your money goals.

What does Self Sabotage Mean?

Self-sabotage is when a person acts in a way that damages their own well being. It is a common problem people encounter when working towards financial, fitness or academic goals. Some aren’t even aware that they are self-sabotaging.

Have you ever found yourself:

  • Turning on an addictive Netflix series when you have an important assignment due the next day?
  • Indulged in a six-pack of beer despite vowing to start losing weight just hours earlier?
  • Deciding you need to get your finances under control, then binge shopped for non-essential items online?

Most of us have self-sabotaged by behaving in a way that takes us further from our own important goals.

But why?

Why do People Self Sabotage?

There is a multitude of reasons for these destructive behaviours. Sometimes it is simply that the self-sabotaging behaviour produces short term pleasure, which trumps the threat of associated but delayed harm. Delayed gratification is hard.

  • The doughnut will taste really good for the next 5 minutes. You won’t notice an improvement by not eating the doughnut (and it will take quite a while to reap the benefits of resisting the doughnut daily).
  • You know you need to save more money for a house deposit. But all your friends are going out for dinner. It will be really fun, and you don’t want to miss out. You will eventually enjoy owning your own home more. But the goal seems too far away to compete.

There are also deeper, more subconscious reasons for self-sabotage.

Imposter syndrome

Everyone has heard of imposter syndrome now. Many of us have suffered from crippling self-doubt that undermines confidence.

Being successful in knowledge-based work is commonly associated with imposter syndrome. Have you ever thought that your success in life was just due to good luck? Felt like a fraud and tried to keep this hidden?

This is imposter syndrome, and it tends to affect high achievers, and women more than men.

Imposter syndrome can occur with money too. Perhaps you grew up in a family of modest means. Financial success doesn’t feel real. It is easy to feel that we somehow got lucky with money and don’t deserve to have more.

Incredibly intelligent professionals often bury their heads in the sand, because they don’t feel they have the knowledge or ability to make financial decisions such as investing. If you can reach the peak of your chosen career, you can certainly set financial goals, and make a simple plan to reach them!

Self Sabotage due to Fear

Fear is a big factor in self-sabotage of all sorts. Fear of failure can lead to money self-sabotage. A certain amount of this is helpful, as it will hopefully help you avoid giving your money to a conman (and there are plenty around). But those consumed with fear of failure will never invest.

Stockpiling cash in a bank account earning 1% is insufficient to provide for retirement. Over time, the value of savings is eroded by inflation. Minimizing risk needs to be balanced with taking some investment risk in order to achieve your financial goals.

Fear of investing being too hard, or that you will fail because you are “no good with money” is also a common issue. Some people fear not being able to reach all their goals as they may be unrealistic. Choosing to stick their heads in the sands, they risk not reaching even their most important goals by not taking charge of their finances.

Fear of financial success can also lead to self-sabotaging behaviours. If your background is humble, the thought of “becoming rich” can be uncomfortable.

Wealth is often associated with evil in society, although of course money is neither bad nor good (but can be used for either). Savers can fear other people judging them for saving money or showing an interest in personal finance. They can also fear social rejection due to a change in financial circumstances.

Fear of change can also put people off taking the first step. We love to form a little rut. It’s comfortable, safe and familiar. Any change in habits needed to save more money and follow a financial plan tends to, at least initially, be uncomfortable. Suddenly needing to budget spending instead of continuing to spend each paycheck with abandon, can lead to fear of deprivation.

Guilt

As Australians, we already live incredibly fortunate lives. As a higher earning Australian, we have won the life lotto from a global perspective. Inequality is increasing throughout the world. Over 700 million people live in extreme poverty worldwide.

You may feel guilty about the lucky hand you were given, even though you took that good luck and worked hard to make the most of it. You and I know we were born with advantages that gave us a huge head start.

This can lead to great things, including paying it forward in charitable donations and creating a fairer, kinder world. But where this guilt can be really unhelpful is when it is subconscious and leads to self-sabotaging behaviours. If you feel guilty for accumulating wealth, but don’t spend the time examining your feelings, you may waste savings with silly choices. Spending savings on choices that don’t provide you value, and don’t make the world a better place is a terrible waste.

Guilt also commonly works in the opposite direction. It is easy to get obsessed with saving money, to the point where your good habits become destructive. After you are on track to meet your financial goals, don’t let spending guilt stop you from living your dream life. Whilst still in the accumulation phase, a “fun money” account is really helpful here, in providing permission to live a little on your journey to financial freedom.

Self Soothing Behaviours

Life can be stressful. Shit happens, regularly to some people. It is natural to want to “treat yourself,” particularly after a bad run of events.

Take care to note the difference between self-care and self-soothing. Self-care is important. It is looking after your body, mind, finances and relationships to gift yourself the best life possible, under your circumstances. Self-soothing activities distract you from whatever is troubling you and provide short-lived relaxation.

You may drink a bottle of wine to feel better after a terrible day at work. You know that amount of alcohol in one night is bad for you. This is self-soothing and not self-care. Obviously used repeatedly as a mental crutch to deal with life are a slippery slope into alcoholism and complete life destruction. But long before that, smaller negative consequences occur such as a hangover, weight gain and lost productivity.

There is absolutely nothing wrong with treating yourself to a massage after a stressful week. If it is in your fun money budget, you should go ahead and enjoy. But it is not likely to have a long-term effect on your health, wealth or mental wellbeing.

Self-care is taking steps to take better care of yourself. These activities often don’t provide immediate rewards, but over the long term provide a far better return than self-soothing activities. Going for a run often doesn’t feel like self-care. To begin with, it can feel like torture! But over time, weight loss and improved fitness often translate to higher energy levels and feeling better. Eventually, you even start to get a natural kick from those endorphins when you actually exercise.

The answer to financial stress is clearly not spending money on something that makes you feel better in the short term. That new car smell may boost your happiness for a few weeks during your commute. But if you can’t really afford it, the car loan will leave a longer-lasting financial and wellbeing hangover.

How to Tell if you are Performing Self Sabotage?

Slow down. So many people spend little to no time thinking about the big things. I think this is a big cause of self-sabotage. If you don’t spend any time working out what your real priorities are, you will never start working towards them.

It is not unusual to hear people stating spending time with their children is their number 1 priority. They often strive away from their goal by working excessive hours to pay for never-ending consumer purchases and status symbol cars and homes.

If your children are your top priority, what do they really want and need? Spend some time working it out.

Many others state that money is not a priority, as an explanation for disinterest in financial literacy and investing. It’s great that these individuals don’t worship money. But often those that claim that money is not important are experiencing cognitive dissonance. By not looking after their money, they are indefinitely dependent on a wage, trading time for money, whether they like the work or not.

If money is not important to you, what is? Spend more time reflecting on your goals, and how your actions will move you towards, or away from your goals.

Be honest with yourself and try to identify soothing self-soothing behaviours that are sabotaging your finances.

Watch out for Social Sabotage

Even those that love us can sabotage our financial plans. Your friends and family love things the way they are and suffer the same fear of change.

They may also feel challenged, or defensive if you choose to make smarter financial decisions.

Those close to us may try and convince us that bad debt is normal, and you only live once. If struggling to make the minimum repayment on your credit card and working to indefinitely meet minimum repayments is living!

Let these loved ones know you have your own goals, and you are working towards goals that are meaningful to you. You may inspire them to make a positive change too.

How to Stope Self Sabotaging Money Behaviour

Identify how you are self sabotaging.

Spend some time thinking about what your goals should be your priority. Work out exactly how you are going to there. Consider the sacrifices that will need to be made, and make a conscious decision whether they will be worthwhile in the long run.

Form a plan. Schedule a regular appointment with yourself (+/- partner) to review your progress, monthly, quarterly or bi-annually. Put it in your calender with reminders. Make it a priority.

Find a way to remind yourself of your “Why”. Something that inspires you related to your largest goal. It may be a picture of your kids in your wallet, or some words stuck on your credit card (fully paid off home?).

Then it’s time to take your brain out of the picture.

Remove as many temptations as possible. Cut up the credit card you don’t need. Automate everything you can. Pay off credit cards, in full, by auto-sweep every month. You can generally set this up with the credit card company.

Direct debit your planned investments every month (fortnight, or quarter) so you will be less tempted to redirect this money to a self soothing activity.

Examine negative thoughts that come up. Write them down or talk about them with a friend. Is it classic imposter syndrome or fear of failure?

Confront any guilt you feel about becoming financially successful. If this is an issue for you, plan some ways you could make the world a better place.

Spend some time choosing a charity that you really believe in. Here’s mine. The good news is, that a small regular donation is all you need at this present moment. As your finances improve, you can increase donations as you wish.

Make sure you have some “fun money” put aside to spend regularly, and guilt-free. As long as this is budgeted for, you can spend it on whatever you desire. You will naturally start to prioritise the spending that brings you more joy when as you run short of “fun money”. Get the most fun for your buck!

Set some mini-milestones along the way to your undoubtedly huge goals. It’s a long journey. Like most things, it’s a lot easier to break it up. Take the time to celebrate and treat yourself in some way when you meet these milestones.

For inspiration, here are mine (asterixed are still a work in progress):

  • Out of credit card debt!
  • Positive net worth
  • $1000 emergency fund saved
  • Student loans paid off
  • Home deposit saved
  • 1st investment outside super
  • Hitting double mortgage repayments
  • Paid for a car in cash
  • 1st investment property
  • 1 year of living expenses in offset
  • $1 million net worth
  • Coast FI (for retirement age 60)
  • Home loan fully offset*
  • Lean FI*
  • $1 million invested*
  • Kids education fees saved/invested*
  • Coast FI (for retirement age 55)*
  • Self insured for life and income protection (and free of those awful premiums!)*
  • $2 million invested*
  • Financial independence*

Are you self sabotaging? What’s your worst habit and how are you going to break it! Comment below and share your ideas to help others.

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  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.

M&M – The Female Money Doctor Shares her Most Painful Money Mistake

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

Everyone makes some money mistakes. But learning from others is a lot less painful than making your own! I have benefitted from listening to tales from family and friends investing disasters and have confessed my own financial errors for readers, in turn, to learn from.

It is rare people are brave enough to share their financial horror stories. The shame and embarrassment of a huge financial mistake often prevent people from reporting or warning others.  But learning from others mistakes is sometimes more valuable than stories of success.

In the M&M series, I have asked financial content producers to bravely confess their worst financial mistakes. Read these warnings carefully. Learn as much as you can from them to avoid making money mistakes of your own.

Introducing the Female Money Doctor

I’m Dr Nikki, a GP in the UK and a money coach for women. I’m 36, and 6 years ago I came to the biggest epiphany… I was broke.

And for a doctor, this was worrying. What had I been doing with my hard-earned money over the past 6 years?!

This realisation came when I was sitting in a hammock in Fiji (yes I know how privileged this sounds). Whilst taking a break from a stressful career in Obstetrics and Gynaecology, I had flown around the world. I was deciding whether to go back to work in this field or do something else. 

While I was away, I had time to think. And time to watch my money dwindle away to nothing. 

I was in a huge amount of credit card debt, and travelling was just making things worse.

It was at this point in my life that I had had enough of being broke and in debt. I vowed to turn it around when I got home.

I then discovered the FIRE movement, and I was hooked.

After this discovery, I wanted to shout it from the rooftops! So many of my colleagues and patients had money issues. I noticed what a profound effect it was having on their health. It was definitely contributing to burnout, because so many people were working to pay the bills, not to buy back their freedom.

I started The Female Money Doctor blog to help others turn their financial struggles around once and for all, and because I didn’t want them to make the same stupid mistakes I did.

What is your Worst Money Mistake?

I got into a lot of debt in my 20s (this doesn’t include my student loan from medical school). 

This was through careless spending, not budgeting and generally saying yes to everything! It was a fun time, but definitely not something I would recommend.

To make matters worse, I tried to dig myself out of the debt-hole by investing in a property investing course. It promised I would pay off the course, and the debt with just one property deal over the 12 months I was on the course program.

I used more debt to pay for the course to the tune of £25,000, and guess what… it didn’t work. I was in a total of £60,000 after this. The course was way too advanced for the stage of the journey I was at. To be honest, I do feel like I was conned out of this money. They played on my emotions, and it was a mistake made from a desperate position, and it has taken me YEARS to make up for it.

With the benefit of hindsight, were there any warning signs your decision was a Money Mistake?

Yes, I was warned by one of my mentors at the time not to jump into anything too hastily, especially as I needed to borrow to purchase the course. But I didn’t listen. I had my blinkers on and I was determined to go for it. 

With hindsight, the course was not right for me, or for the other 12 people also conned out of the money they paid. 

It was the most I had ever spent on a program (and still true to this date), and I will never make that mistake again.

Is there any way you could have avoided this Money Mistake?

By listening to my mentors and stopping to think things through. I didn’t know anyone who had done the course, so I should have sought out other opinions first from people in the know. Now I realise that I made this decision clouded by emotion. I felt pressured into making a choice quickly, and like this was the only choice I had. If I had just taken a moment to breathe and think, I would have avoided the mistake. But then I made some fab lifelong friends, I wouldn’t have been inspired to start The Female Money Doctor, so it’s not all doom and gloom!

When did you realise that you had made a Money Mistake?

About 6 months into the course when I asked other people how they got into property investing – not a single one of them had heard about who I purchased my course from. They were gobsmacked when I told them.

That’s when the penny dropped.

I also realised that no one else in the course had made a property deal either – except one person, who already had investment properties under her belt and had the network in place, the money in the bank, and the industry insider knowledge to follow through on what was being taught.

How did you bounce back after making the error?

I doubled down on paying off my debt. Using Dave Ramsey’s debt snowball method, I consolidated the rest. I became totally consumer debt free in 2020, and now I’m focusing on building assets to support my FIRE aspirations.

Writing the blog also really helps me, because I feel like if I can just help one person avoid making a desperate decision like I did, it’s all worth it.

Thanks so much for sharing your money mistake, Dr Nikki. It’s so easy to fall for that magic bullet (fake) solution to problems!

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  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.

What is Depreciation?

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

Depreciation has slightly different meanings in personal finance, accounting and taxation. Regardless of the context, depreciation refers to the decreasing value of a good over time. It applies to cars, to home appliances and even to clothing.

Personal Finance Depreciation.

Depreciation in personal finance refers to the amount of money you lose through the decline in value of a personal asset. Assets purchased for personal reasons (not investment or business) attract no tax advantages.

The rate at which each good depreciates varies. Some items depreciate more quickly than others. The commonest example of a depreciating personal asset is your car.

In fact, cars are known to lose so much wealth through depreciation, they are often referred to liabilities. If they come with a car repayment plan, even more so.

We have all heard how a new vehicle is worthless as soon as you have driven it out of the showroom. Cars literally destroy wealth if a consumer buys too much, too new and too early.

A $30,000 car that depreciates to 70% of it’s original value over 5 years will have cost you $30,000 x70% = $21,500 over the five years.

That’s on top of fuel, insurance and registration.

Losing $21,500 every 5 years just to car depreciation is not going to help you get ahead.

There is no silver lining to depreciation in personal finance. Depreciation cannot be deducted if the item is for personal use. It is simply a fact of life that your car will be worthless and less each year until it is virtually worthless.

A key strategy to build financial security and wealth is to spend the minimum possible on vehicles until you have acquired assets that will achieve your goals in the desired timeframe.

Property Depreciation

We are more used to hearing that houses go up in value over time. But the building itself, just like cars, depreciates.

A brand new house is worth less if you try and sell it a year on than when you purchased it. Nothing has that shiny new feel to it anymore. The expected lifespan of the roof, air conditioning units, carpets and boiler has been eaten into. All these things will eventually need replacing at a cost.

What often saves your home from falling in value is the appreciation of the land it sits on. This doesn’t depreciate. There are no deteriorating parts of the land (unless you’re on a cliff!) Nothing needs replacing. Over time, as populations expand in an area that is attractive to a large number of people, the price for the land increases.

The other factor that saves your home from falling in value is any renovations and replacements you put in. Depreciation of the home is still occurring, but you are paying to replace things as they go along, helping to maintain value.

Small Goods Depreciation

Most consumer purchases you make depreciate in value significantly after purchase. If you look into selling your Nick Scali lounge second hand, even after a short period of ownership, it is unlikely you will get much of the original value back.

Some items should theoretically depreciate but don’t. Highly desirable collectables can increase in value over the years as they become more scarce. Watches, cards and pokemon cards come to mind.

To be a successful collectables investor, you need to pick collectables that will increase in scarcity and popularity over time. You are best at keeping it in its original packaging and not using it (or barely). Collectables in mint condition tend to be worth a lot more than those that have been used (and loved).

If you have an area in which you are an expert, then it is possible to succeed with collectables.

Appreciating vs Depreciating Purchases as a Predictor of Long term Wealth

There is nothing wrong with buying a depreciating asset you love. That sports car, fancy watch or brand new home are not out of bounds.

But your timing of these purchases will make or break your financial life. Given your finances dictate the options you have to choose from when life throws a curveball.

Money can allow part-time work, unpaid absences, the ability to help family members in crisis and retirement when you want or need to.

Or your finances can require you to keep working completely dependant on a monthly paycheck to pay the bills. No matter what else is going on.

The earlier in life you can money sorted, the earlier you can afford to largely ignore it.

Big financial decisions, such as the home you purchase and the cars you drive will define your future financial life.

How to Minimise the Effect of Depreciation on your Finances

Let’s start with the most powerful strategy. Home buying can create wealth, or prevent you from building any.

Is the house you will buy on appreciating land, in which case your home is an investment as well as a place to live? Be as objective in this decision as you can. What are the long term capital growth stats for the area?

If you do not buy land that is appreciating at an above-average rate, minimizing your spend on a home is a wise financial decision.

Ideally, spend more on the appreciating land than the depreciating house on it.

With cars (ignoring the rare collectable) you can avoid the sharpest dip in value from depreciation by buying a car 3-5 years old. Keep your cars as long as they are reliable.

I suspect what you may make in appreciating value or a collectible car you will likely put back into repairs and maintenance. Collectible cars seem more of a passion project than a profit-making exercise. And you definitely need to know your stuff!

Again, you shouldn’t necessarily sacrifice having that “dream car”. Especially if this is something you value. But your finances will be more supportive in the future if you can delay the purchase until you have accumulated appreciating assets.

With collectables, my impression is that many people use the idea that something is “collectable” as an excuse to buy a luxury item they can’t really afford but very much want.

Be honest with yourself, if the purchase is for your use, make sure you can afford it and accept it will depreciate with use.

Investment, Work Related and Business Depreciation.

These are all less damaging than personal finance depreciation. In fact, these depreciating purposes are likely to be necessary to earn money. They are a cost of doing business. And the good news is, they often come with a tax advantage, unlike with personal finance depreciation.

Tax Depreciation

The most important concept to understand is that depreciation in your tax return is not just a tax benefit. It is partially compensating you for the loss of value that is occurring in real life.

If you purchase an asset in order to make money, you are entitled to claim the depreciation as a tax deduction. You are still losing value through real-life depreciation, but the ability to claim this on tax lessens the blow significantly.

Tax and real-life depreciation aren’t always equal.

If, for example, you had purchased a new vehicle in early 2020 for your business. Your accountant will use a method of calculating depreciation on this vehicle, and claim this depreciation against your income, lowering your tax burden. But with the vehicle shortage brought about by COVID-19, you may actually be able to sell the vehicle for more than you brought it for!

Property Tax Depreciation

The purpose of depreciation is to estimate the difference between what something is worth and how much it’s being sold for.

When purchasing an investment property, the cost of construction or renovating a property can usually be deducted over 25-40 years at 2.5-4%.

This encourages many to purchase new properties, in order to maximise the deductions. But new houses will depreciate quickly in the first few years because buying new means paying the builders margin. Remember to invest for a return first, with any tax advantages kept to an incidental bonus.

Get A Quantity Surveyor Report

When you purchase an investment property, it is important to contact a quantity surveyor and arrange a report. You need to know the costs of capital works to pass on to your accountant in order for them to claim depreciation. This costs a few hundred dollars (I paid ~$600 in Brisbane).

In an older building that hasn’t had significant renovations, there may not be enough depreciation to compensate for the cost of the report.

Capital costs of a building you purchase with a plan to demolish may be able to claim, discuss with a quantity surveyor before calling the bulldozer in!

Home Renovations

If there is any chance you may use your current home as a rental in the future, it is important to keep records of any improvements you have made. It’s hard to predict the future, and circumstances can change quickly. Keep your records just in case.

In the event of renting the home out, talk to your accountant to find out if you can claim any of the costs you have sunk into the home.

Claiming Depreciation for Employee Work Tools

For those of us that are employees, there are limited things you can claim as a tax deduction. Equipment and books that are purchased for work for less than $300 can be claimed as an immediate deduction.

Most of you will have noticed, this is not the case with your laptop. If the item costs more than $300, it is depreciated over the accepted “effective life”. In the case of your laptop, this is two years. There are a few different methods you can use to claim this.

If you use the laptop for personal as well as work purposes, you can only claim a proportionate percentage of the cost.

Work related courses, seminars and conferences, in contrast, including travel and accommodation, can be claimed as an immediate deduction.

Working from Home Depreciation

With the rise in working from home over the past two years, you can claim office equipment, electricity and cleaning costs. You can work these out individually or use the shortcut method. Keep your bills and receipts as well as a record of your hours worked from home.

Small Business Depreciation

Depreciation of business assets is treated as a business expense that spreads the cost of a fixed asset over its useful life. Depreciation is used to account for the decline in value of an asset, and it is considered an expense. This means that depreciation expense can be deducted from revenue when calculating taxable income.

A straight line depreciation method is easy to calculate because it represents the actual loss of value. But there are also accelerated methods to reduce the accounting burden for small businesses.

Conclusion

Depreciation is the term used in Australia for the deduction of the cost of certain assets over their useful life. Depreciation is applied to assets that are used for business, investment or employment purposes, but can also be applied to assets used for personal reasons.

Personal assets that depreciate can cause a lot of damage to your finances. Luckily, there are some steps you can take to avoid depreciation. Buying used items or investing your earnings instead of spending as well as delaying personal spending on luxury items until you have accumulated appreciating assets will help.

Employment, investment and business depreciating assets are usually a cost of doing business, necessary to make money and attract a tax benefit.

What do YOU think? Have any other thoughts about the effects of depreciation on our lives? Let us know in the comments below!

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  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.

M&M – Saving not Investing – Dev Raga

*This post may contain affiliate links. This means if you purchase through the link I will receive a small commission at no cost to you. It is the way sites like this are funded, but does introduce a conflict of interest.  

Everyone makes some money mistakes. But learning from others is a lot less painful than making your own! I have benefitted from listening to tales from family and friends investing disasters and have confessed my own financial errors for readers, in turn, to learn from.

It is rare people are brave enough to share their financial horror stories. The shame and embarrassment of a huge financial mistake often prevent people from reporting or warning others.  But learning from others mistakes is sometimes more valuable than stories of success.

In the M&M series, I have asked financial content producers to bravely confess their worst financial mistakes. Read these warnings carefully and learn as much as you can from them to avoid making money mistakes of your own.

Introducing Dev Raga.


My name is Dev Raga, and I am a medical doctor still in clinical practice. I am also a podcaster, and my main aim with my podcast episodes to discuss financial concepts/principles. My principal listeners are health care workers, who are often time poor to focus on their finances. I try and simplify concepts as much as possible.

Anyone can listen to my podcasts from the beginner to the advanced investor.

I like the FI part of FIRE, and not the RE. I don’t plan to retire early, but will reduce my work hours. This is because I like my job, and also to leave clinical practice is a big decision.

Dev Raga Personal Finance

Podcast is called: Dev Raga Personal Finance

Worst Financial Error: Saving not Investing


Probably the fact that I saved 40K during my medical school days – when I graduated, and didn’t invest it as I saved it.

I calculated –> thats a $1million mistake.

More recently 4 years ago – bought a custom built pool table. Not sure why, I don’t even play pool. I have used it less than 10 times in 4 years.

Biggest waste of consumer spending ever.

Hindsight:
I just didn’t know enough about investing. I was an excellent saver in Medical School. I did not any of the financial principles/concepts I talk about. All I knew was how to save, up to 50-70% of my income – as a med student, which wasn’t much.

But time in the market is more powerful than timing the market. Had I know that, I would have been a better position today.

Could Saving Not Investing have been avoided:


Yes. More education, more awareness. Med school is not easy, and I had a lot on my plate back then. So investing didn’t even cross my mind.

When did I realise I made the saving not investing mistake?
In 2013 when the market shot up significantly.

Thats when I realised all the units I had bought between 2009 onwards would be worth much more. Then I realised had I done this from 2001 – since med school, it would be worth more.

Bounce back:


Since 2009 – I have saved, and invested at least 20% of my after tax income.

I have just kept investing simple, and easy, and long term focussed.

I don’t think I will ever recover the opportunity cost of $1million dollars, but at least now I have a much clearer understanding of investing, and why its much better if the market crashes rather than rises for me.

Thanks Dev Raga! Not many managed to save money during med school! Dev Raga’s previous article outlined his investing strategy.

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  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.