Welcome to our latest Semi-FI update, where we share the ups and downs of our Coast FI journey from Flamingo FI to full Financial Independence and beyond.
If you are new to the blog and not familiar with our plan, you can find an overview here.
Life Update
We had a great break over the holidays. I’m not really a Christmas person (I’ve been called the grinch more than once in the past), but now that we have young kids it’s so much fun and such a special occasion to enjoy with them. We also spent a lot of time relaxing at the beach, which was a nice way to finish the year.
My parents flew in from Europe on Christmas day, which was a fantastic surprise for the kids. If you follow flight prices, you are probably aware of how insane airfares are at the moment. I am glad that while my parents are very frugal overall, they have adopted a bit of a YOLO attitude when it comes to things like experiences and travelling to see the grandkids.
Work-wise things have been pretty interesting recently. There are some major shifts and changes going on at the company I work for part-time, and I’m not sure I’ll stay there much longer.
This part-time role has been a great mix of flexibility, autonomy, challenging projects, variety, decent pay and the opportunity to socialise. It has been an integral part of my portfolio career approach for a long time.
It sounds like with these changes, a lot of the things I like about my role (flexibility, autonomy and variety) are at risk. This would be a deal-breaker for me. I will watch things for a little while, but if it becomes evident that working conditions deteriorate (which is likely), I will leave.
I will take some time to consider my options and plan my next steps. I really like having some sort of job (even if it’s just two days per week) for its social factor and the structure it provides. However, I’m also questioning how employable I am these days – my bs detector is very strong, I have no patience for office politics and hate being micromanaged. So I’m not sure another job is the solution here (although I’ve toyed with the idea of joining a startup in the past).
I am grateful I am in a position where I don’t have to hang onto a job I no longer enjoy for the income. These are the kinds of situations where a solid financial foundation (including FU money!) and investment income really shine.
FIRE and Net Worth Update
Our Coast FI journey was definitely bumpy throughout 2022, and the last quarter was no exception.
I know that it was a year full of ups and downs for most investors. However, adding funds to your portfolio tends to smooth things out a bit. When you stop making contributions and start coasting, you definitely feel the bumps a lot more (just like people who have fully retired and live off their investment income do).
In Q4 of 2022, our FIRE portfolio went from 19.9x annual expenses down to 19.6x. This means we are just under 80% of the way to full Financial Independence:
Reminder: Instead of using dollar amounts, we display our net worth and portfolio value in years of living expenses. Real wealth is about time, not money, so I find this way of looking at things much more useful. I also increase our FIRE number with inflation on a quarterly basis to account for the ongoing living cost increases.
Interestingly, this is pretty much exactly where we were at the end of Q4 2021. So overall, our nest egg did very little in 2022. Our asset allocation definitely shifted over the course of the year, but the total portfolio growth was flat. This is actually a good result, considering how the market as a whole performed.
In retrospect, luck was also on our side in 2022. Halfway through the year, we sold some shares to pay for upcoming investment property repairs and renovations (roof replacement and more). It turns out this was actually a pretty good time to sell, considering the further declines during the rest of the year. In the end, the repairs (which dragged on for months) ended up costing less than expected, and we were left with a fair bit of cash inside the FIRE portfolio (which turned out to be a great asset class in 2022…).
Our overall net worth position increased from 23.3x annual expenses in Q4/2021 to 25.5x in Q4/2022. This total net worth figure includes our FIRE portfolio as well as all other funds and assets (like cash savings, kids’ investments, etc.).
We are preparing for a family mini-retirement in 2024, so we will increase our savings outside the FIRE portfolio over the next year or so. This will also come in handy if and when I decide to leave my part-time job.
And that’s it for our Q4 2022 update! 🙂
Hi Mrs Flamingo, thanks for your latest update. I have a question as pondering for my own FI modelling that relates to the recent significantly above normal CPI results. With the annual CPI coming out today at 7.3% and well and truly above long term RBA target and actuals of between 2%-3%, how do you factor in these current large movements in CPI. Do you ignore the 7.3% when changing your living expenses (and therefore working out your multiple calculations of investment assets) Do you use your actuals or do you just use the long term average? This CPI, and uncertainty above when it might come down again (no-one including the RBA knows.) Even though we can choose to manage components of it, so our spending does not necessarily mirror the large increase, is contributing to one more syndrome thoughts and allowing a margin of safety. Thanks
Hi Chris, we actually adjust our FI number using the CPI every quarter. So last quarter the CPI went up 1.8%, which means our FI target is now 1.8% higher. Because we are coasting and are not basing our FI number on our current family spending this is the best way for us to ensure we stay on track (far from perfect though). I hope that makes sense! For us, this has not added to one-more-year syndrome as we chose to semi-retire when we reached our Flamingo FI number but I can see it could if you are chasing full FI. Have you considered taking a Semi-FI approach?
I’d actually be quite curious to hear your long form take on ‘one more year’ syndrome, and why you feel the Coast/Mingo approach does a much better job with handling that in a future article
I love these quarterly updates! Thanks for sharing your journey with the rest of us. I am amazed how calm you guys manage to stay coasting through the current times. Good luck with whatever you decide to do with your job. Maybe it’s an opportunity to try something new? I read you alternatives to retirement article and there are so many good ideas in there I’d be keen to try. Thanks again! Kylie
Thanks Kylie, glad to hear you enjoy the content on the blog. Yes, I definitely see it as an opportunity to re-evaluate things. I agree, there are lots of options. That sometimes makes it harder to choose though! 😅
This line:
“However, I’m also questioning how employable I am these days – my bs detector is very strong, I have no patience for office politics and hate being micromanaged. So I’m not sure another job is the solution here (although I’ve toyed with the idea of joining a startup in the past).”
I don’t think two sentences have ever resonated so strongly with me in my entire life! Couldn’t agree more.
Thanks J! Sounds like you are in a similar spot!
My work is moving towards micro management too! Such a shame things are going backwards after we seemed to make so much progress on autonomy during covid. Thank goodness for FIRE or we’d all be stuck with it! Keep up the great work Flamingo Fam
I know, right! I honestly didn’t think things would go backwards but here we are. I hear the same thing from others as well. Yep, really glad to be in a strong financial position, FI is such a game changer.
Hey Tina, as you know I am a big fan. Curious about a couple of things:
1. With 25x your expenses with your other assets taken into account, could you not count this as part of your full FI journey and look to retire, or at least move to causal hours? Even withdrawing say 2% per year and offsetting with a little bit of causal work.
2. Even with a 19.6x your expenses, this is really close to 20x. I suspect even at a 5% withdrawal rate, you could likely retire, knowing that you will bring in some other form of retirement anyway. I guess what I am saying is, you are in such a strong position, that even if you were to start withdrawing now, you would be in a good place.
3. The other option is to return to full time work at some point and just grind for 12 months and hit full FI. I know this likely goes against everything you stand for, but if you get to a stage where even part time work is feeling not fun, then this could be an option. Given the economy, it might be harder to find a part time position, especially if changing jobs.
4. Finally, it sounds like self-employment, or moving into your own business could be a viable option as well from here!
Hi Michael, thanks for taking the time to comment. I have been meaning to catch up on your podcast – great reminder!
To answer your questions:
1. Yes, I suppose if we really wanted to we could count everything towards our FI number, but I don’t see the point at this stage. We are nowhere near ready to retire. Casual hours are not really a thing in my industry, but I’m considering consulting/contracting. And in order to draw funds from the nest egg we would have to do a lot of restructuring (selling IPs, etc.). We were planning for a FI date somewhere around 2030 and are happy with that timeline.
2. I agree, we’d probably be totally fine with a 5% withdrawal and some flexibility built in. But again, we don’t actually want to retire. We both love working and want to continue working for the foreseeable future.
3. Yes, this is a good last resort option we would be open to in case our Coast FI plan doesn’t work out longer-term (low market performance for a long time). It really is just a last resort option for us, there is no way I’d go back to work full-time just to get to FI sooner.
4. I’ve tried full-time self-employment in the past and it didn’t really work for me. I like a bit of structure in my week, so a blend of self-employment and a part-time job has been great for me. I actually have two small businesses already that I could grow, so I guess giving self-employment without a job on the side another go is an option.
Lots to think about for sure, I get the feeling 2023 will bring a lot of change.
I hope you are doing well, will give your latest episodes a listen over the weekend! 🙂
Thanks Tina – I am releasing an episode tomorrow which is 100% inspired by you called “The Great FI Myth” – so I hope you enjoy it! Keep it up, you are doing everything right – it is inspiring. Consulting / Contracting is great btw – I have been doing is since mid 2021 and I couldn’t recommend it enough. Far better than freelancing which I was doing before then.
Hello Tina,
Love the blog, keep up the good work.
I have been wondering for ages if you include
1. rent/mortgage for place to live or you assume you’d have a paid house when you reach FIRE
2. Super. You can’t have access to it till retirement age.
3. Equity from investment properties. Historically, it does not compound at the same rate as an ETF.
have a great day
Hi Julian,
1. We assume a paid-off house (and will add the remainder of the mortgage to the FI number if we decide to retire earlier than expected).
2. We include super, I never understand why people don’t.
3. We include equity. What compounds is the value of the house, not the equity. So while the houses grow slower, the ROI is quite high.
I hope this makes sense!