Welcome to our first quarterly update since we hit Flamingo FI! Going forward, we will post a life and financial update once a quarter instead of the monthly progress updates we published during our accumulation phase . I have recently written an in-depth article about our plan to coast from Flamingo FI to FIRE in around 10-15 years. In a way, our story is a live Coast FIRE case study. These quarterly updates will chronicle our adventures in semi-retirement and our financial progress towards complete financial independence (and probably Fat FIRE as well).
So much has changed since we reached our goal six months ago and are now theoretically semi-retired. I use the word theoretically because we had our second baby and reached Flamingo FI all within a couple of weeks, so we didn’t have much time to celebrate this massive financial milestone before the sleepless nights started. Looking after a newborn while trying to keep a 20-month-old toddler happy is pretty intense. And of course, it is nothing like the casual semi-retirement lifestyle (think 3-day workweek, plenty of time for hobbies and exercise, etc.) we had in mind when we embarked on our FIRE journey in 2016.
The crazy newborn phase is now behind us and things have started to calm down a bit around here. We have started making plans and discussing options for the next few years. I have always said that Sydney is probably not a long-term option for us, especially now that we have two young children and have started to transition away from the rat race.
It won’t be easy for us to leave this place. We live in one of the nicest (if not the nicest) suburbs of Sydney – there are several beaches on our doorstep, everything is within walking distance and getting into the city is quick and easy. We often feel like we live in a holiday resort and not a suburb of a major city. Unfortunately, many other people feel the same way, so rents and property prices are absolutely insane. Case in point: One of the 3 bedroom apartments in our block (exactly the same layout as the one we currently rent) recently sold for $2m. No thank you. We could technically afford to stay here, even if we both only worked 3 days a week, but that would mean that we would rent forever and would have to commit to apartment living long-term. We would also be less flexible when it comes to shifting to more rewarding but lower-paying work in semi-retirement.
So a move is on the cards for us in the next year or so. We are unsure if we want to stay in Australia (and if so, where in Australia). One option we are seriously considering is to move back to Europe for a period of time while our kids are still young. However, with all the travel restrictions and Covid still wreaking havoc over there at the moment, now is obviously not the right time to seriously consider this option. That is why we have decided to stay put a little longer and basically wait out the pandemic here in Sydney before we make a decision.
I am currently on maternity leave and Mr. Flamingo is back at work full-time after taking a few months off after the birth of Baby Flamingo #2. He wants to reduce his hours soon and is in the process of negotiating a suitable arrangement with his work at the moment. At this stage, I am planning to stay on maternity leave for another six months or so. Depending on how things are by then pandemic-wise I might either go back part-time for a while or we might pack our things and move. The good thing about my job is that I actually really don’t mind it, the pay is decent and the company is also open to flexible work arrangements. So going back part-time for a period of time would not be the worst option.
As you can see we have lots of decisions to make. We are really grateful we are in a position where we have so many different options to choose from now that the burden of having to hold two full-time jobs has been lifted off our shoulders.
During the last six months since hitting our goal, we have not actively added any funds to our nest egg. If you are not familiar with our plan, you can find all the details here and here. The only exception are Mr. Flamingo’s employer superannuation contributions now that he is back at work. Apart from that, the nest egg has been doing all the heavy lifting for us.
I am glad to report that the results during these first six months have been excellent (see graph below). We went from 12.5x annual living expenses to 13.97x in this time. Not bad, right?
The graph above also shows our projected FIRE date (we assume 7% inflation-adjusted returns for this). Of course, things won’t go as smoothly as it looks here, but it’s nice to have a visual representation of the path ahead. And remember, we are planning to complete this journey without contributing any more cash to our retirement nest egg.
Not adding any more funds to our investments does not mean that we have stopped investing. When we hit Flamingo FI part of our nest egg consisted of a pretty generous cash buffer (roughly 25%). We have been drip-feeding this cash into our share investments regularly. We will continue dollar-cost-averaging the rest of the cash into the market until we are only left with our planned cash allocation of 10%.
This is what our current asset allocation looks like:
Thanks for reading! See you back here for the next quarterly update!